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Are you looking to purchase your first home?

Here are 9 steps to take to help you decide whether you're ready to make the move:

1. Check the selling prices of comparable homes in your desired area. Do a quick search of actual MLS listings in the area where you would like to live so you have an idea of what you can get for your money.

2. While you are looking at properties, use the mortgage calculator on the Property Details page of a property that is interesting to you to get an idea of what your monthly mortgage payments would be if you bought that home today.

3. Estimate what your total monthly housing cost would be, including taxes and homeowners insurance. 

To get an idea of what you'll pay in insurance, pick a property in the area where you want to live and call a local insurance agent for an estimate. This will give you a good idea of what you'll pay if you do buy. The annual tax amount that the owner is currently paying is included on the property details page of each listing on our website. Just remember that exemptions and the intricacies of local tax law can create differences between what a homeowner is currently paying and what you can expect to pay as a new homeowner.

4. Contact a local lender, get Prequalified, and find out how much you'll likely pay in closing costs. Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items like homeowners insurance or homeowners' association fees. 

5. Examine your credit and determine what you have available to make a down payment.  When you contact the lender to be Prequalified, they will (with your permission) run a credit report to ensure you will be able to get a mortgage, and advise you if there are items that need taken care of on your credit report before you can buy.  That's one of the reasons getting Prequalified early on is crucial.  No point in looking at houses if you can't buy now.  Those same houses won't be on the market when you are able to buy.

6. Look at your budget and determine how you will handle the expenses of your own home.  Fannie Mae recommends that buyers spend no more than 28% of their income on housing costs. It is possible to get approved for a loan, under certain circumstances, for an amount greater than 28%, but it depends on many factors.  Your lender can provide you with the maximum amount of sale price that you can afford to pay.  Then you can decide if you want to go that high, or if you are more comfortable staying at a more affordable range.

7. Talk to a reputable REALTOR® in your area about the real estate climate. Do they believe prices are stable or will continue to rise in the neighborhoods where you want to live?  You will want to establish a working relationship with a REALTOR® early on so you benefit from their expert guidance from the beginning. They will keep you from wasting your time and making big mistakes.

8. Remember that owning a home is a big responsibility.  Yes, it is a great way to build wealth, but maintaining your home can be labor-intensive and expensive. You must be prepared for unbudgeted costs for repairs. 

9. Gather your pay stubs, bank account statements, W-2s, tax returns for the last two years, statements from current loans and credit lines, and names and addresses of your landlords for the past two years. Have them ready to show to the lender. These days lenders need a lot of documentation in order to get a loan approved through the underwriting process.

We're here to guide you every step of the way.  Please don't hesitate to contact us for assistance.  We've done this several thousand times.