| Buying your first home and becoming a home | | | | should be able to screen your search for you. The |
| owner is one of the most exciting steps in any | | | | Sunday classified ads always list the home sales in |
| person's life. With home loan purchase rates at | | | | your area and often include the "For Sale By |
| the lowest they have been in decades, this is an | | | | Owner" listings that are typically not included in the |
| opportune time to purchase a home. At Bad | | | | mls listings. One final place to look is at or your |
| Credit Lender, we work with affiliate mortgage | | | | local reader in the classifieds section. |
| brokers who work hard to find you the lowest | | | | 5) Check it out and make an offer |
| rate possible. We can help you analyze your | | | | Driving by homes and walking through Open |
| financial situation quickly and efficiently, allowing | | | | Houses is certainly exciting -- it gives you an |
| you to have a solid understanding of what you | | | | opportunity to imagine yourself living in the various |
| can afford and how much a lender will reasonably | | | | spaces. There are lots of items that you should |
| allow you to borrow. | | | | be checking for, however, this subject is beyond |
| Buying your first home and acquiring a home loan | | | | the scope of this article. In the event that you like |
| can seem like a daunting task. The best way to | | | | the home, you or your realtor can make the |
| approach getting a loan and finding a home is to | | | | seller or the seller's agent an offer on the home. |
| take it one step at a time. Here are seven steps | | | | In a hot market where homes are being bought |
| that will help you purchase your first home. | | | | up quickly, it is a good idea to make an offer that |
| 1) What Can You Afford | | | | is close, if not slightly over, the seller's price. In a |
| Determining what you can afford in the housing | | | | slow market where homes are sitting for months |
| market is one of the most important steps as it | | | | at a time, you can offer an initial price that may |
| helps define your search for a home loan and lets | | | | challenge the seller's desire to sell at a lower cost. |
| you find a comfortable mortgage amount that will | | | | Your offer should include the following: |
| allow you to find the home of your dreams | | | | Seller concessions (if applicable) |
| without any undue burden. Some of the | | | | Financing contingencies (if applicable) |
| considerations to take into account include your | | | | Home inspection contingencies (if applicable) |
| household monthly income, your current level of | | | | A specific outline of what is to be included in the |
| debt (monthly bills, car payments, credit cards, | | | | sale of the Home |
| etc.), your credit score, and the amount you will | | | | The "earnest money" deposit amount to be |
| put down initially. Once you have a basic | | | | tendered with the offer |
| understanding of what the household earns minus | | | | Once your offer has been made, the seller will |
| what the household spends, it is much easier to | | | | then decide to accept it, reject it or counter |
| determine a comfortable monthly mortgage | | | | offer. Once you and the seller agree on a home |
| amount. Take these numbers to your mortgage | | | | price, both parties will sign a home purchase |
| broker or lender and they can then go over what | | | | agreement that will include the agreed upon |
| this will allow you to buy given certain loan | | | | terms, escrow period, etc. If you are working |
| scenarios (including the tax deductions available for | | | | with a realtor, they will handle all of these steps |
| the interest portion of your home loan). | | | | for you (hopefully in a timely and efficient |
| 2) Get Pre-qualified for a Home Loan | | | | manner). |
| If you are really serious about buying a home, it is | | | | 6) Lock up that interest rate and find the right |
| very important to at least be pre-qualified for a | | | | loan |
| loan. Getting pre-qualified means a cursory | | | | Your mortgage broker or lender can lock in an |
| examination from a mortgage broker or financial | | | | interest rate for 30 days or 60 days until your |
| institution who can verify your level of income, | | | | home closes and you move in, insuring that you |
| credit score and current debt and can quickly tell | | | | know exactly how much your mortgage will set |
| you much you can afford to borrow. | | | | be once you move in. This protects you if the |
| Many realtors or home owners will not accept an | | | | interest rates rise during your escrow period. If |
| initial offer on their home without a | | | | rates go down during this time, you can usually |
| pre-qualification letter. Once you do have your | | | | renegotiate and get this lower rate. Locking in an |
| pre-qualifying letter, you can begin to search for a | | | | interest rate is a win win situation for the |
| house, confident that if you do find one, that you | | | | borrower. |
| can make an initial offer on it. As well, the | | | | There are two main types of home loans -- fixed |
| pre-qualification process will give you a much | | | | rate and adjustable. Fixed-rate loans divide the |
| better idea of the loan amount that you qualify | | | | amount to be repaid over a set number of years. |
| for. | | | | "Fixed rate" means that no matter how the |
| 3) Do One Better: Get Pre-approved | | | | interest rate fluctuates over the years, the |
| Getting pre-approved for a home loan tells the | | | | amount of payment will remain the same. If the |
| home seller and your realtor that you are ready | | | | interest rate dips, your mortgage consultant will |
| to make the commitment. The pre-approval | | | | help you refinance to take advantage of the |
| process is a bit more intensive than getting | | | | lower rate. |
| pre-qualified but pays off in the end. In order to | | | | Adjustable rate mortgages (ARMs) are dependent |
| become preapproved, you will give your lender | | | | on the fluctuation of the interest rate over time. |
| your W-2 or 1099 Forms, Paycheck Stubs, as | | | | A five year ARM is a fixed rate for five years |
| well as savings or checking acccount statements. | | | | but once this period ends your loan rate will |
| In addition, it is necessary to run your credit, | | | | fluctuate based on the market rate. When the |
| unless you have a recent credit report copy | | | | rate is low, payments are low, but when interest |
| handy. The real advantage of pre-approval is it | | | | rates are high, the payment increases also. ARMs |
| drastically cuts down on any problems that may | | | | are slightly easier to qualify for than fixed-rate |
| be lurking in your credit or financials that might | | | | loans, but they also carry more risks. |
| block you from obtaining the home you want. | | | | 7) Closing and moving in |
| 4) The Fun Part: Searching for your new home | | | | You or your realtor should have a checklist of |
| With the advent of the internet, there are loads | | | | items that have to be accomplished during the 30, |
| of ways for you to search for your new home. | | | | 60 or 90 day escrow period. Home inspection, |
| One of the easiest is to find a realtor website | | | | termite inspection, title on the property, your final |
| that allows you to search the mls listings. You can | | | | approval from the lending institution, etc. |
| enter your minimum amount and maximum | | | | If all of this goes smoothly, you will own your |
| amount and the areas you would like to search | | | | home and can now look forward to the fun task |
| and, viola, you will be given a list of homes for | | | | of moving all of your worldly possessions into |
| sale that meet your requirements. Of course, if | | | | your new home! Do your homework, take it one |
| you are using a realtor they should have access | | | | step at a time and enjoy the process! |
| to a more comprehensive mls listing service and | | | | |