Click here for part I of this series
Done with steps 1-5? Are you ready to actually start looking for your new home? Nope, not yet, false alarm.
6. Start thinking about what type of loan programs you might qualify for. Are you a veteran? First time home buyer? Are you flat busted broke or have you been saving since elementary school? All of these things can influence your next step...
7. Find a lender. Your Realtor can give you some possible connections. Is it necessary to use someone your Realtor refers? Absolutely not, but even if your Realtor pushes you in a certain direction don't assume that there is some nefarious goings on with two people conspiring to drain you of your cash. The reality is that your Realtor and lender are going to have to work closely together and if they already have a good working relationship your purchase may very well go more smoothly and quickly. In addition, your Realtor might be able to steer you toward a lender who has the type of loan program that is best for you (or someone who has the best variety of programs out there).
8. Work with your lender to determine what your budget will be. Now is where we start thinking about the actual dollar amount of your purchase. Be sure to keep in mind how much you are comfortable spending each month, not the maximum for which you qualify. Your loan originator will give you a pre-approval letter that will likely be required when you eventually submit any offers.
9. You have a lender and pre-approval, you have a budget, you have a Realtor, are you ready to look? At long last, yes. If you want to search on your own you can do so but if you come up with too many possibilities a good Realtor (like me!) can do more detailed searches to narrow down your choices and keep things from becoming overwhelming. Try not to be too specific, many buyers find that the home they eventually fall in love with doesn't have everything they originally said they wanted.
10. OK, you've found the house of your dreams - or at least the house at the beginning of your dreams. Now what? It's time to make an offer. The thing that strikes fear in the hearts of prospective home buyers the world over. It's that little piece of paper (or 40) that binds you to the biggest purchase you'll probably ever make. Makes you a little nauseous huh?
Next up, what happens after the offer...
Showing posts with label First time homebuyers. Show all posts
Showing posts with label First time homebuyers. Show all posts
Tuesday, August 11, 2009
How to buy a house in 25 easy steps - Part I
I work with first time home buyers quite often and most are intimidated (to say the least) by the home buying process. Here's a little secret: it's really not that hard. Do your homework beforehand, choose a Realtor (like me!) and a lender you can trust and then, barring something strange happening, you'll likely go from renter to homeowner with as little stress as possible.
This is part I of my series on how to do just that: Chattanooga Real Estate 101
1. Unless you have the purchase price of a house hidden in your mattress, you are going to need to get your credit in order. Click here for more information about how to do this. Start on this at least 3-4 months before you are going to be looking to buy. You often will find errors on your credit report that can take a while to be corrected. You don't want to be scrambling to fix these things while a mortgage broker is staring you in the eye.
2. Make a list of "must-haves," "like-to-haves," & "must-not-haves." Do you have a Great Dane, an Irish Wolfhound, a Husky and a Chocolate Lab? You're probably going to have to have a fenced yard. If, however, Fido is a Pomeranian, that fenced yard might be nice to have but not essential.
3. Think about what areas you might like to live in. Interested in a historic home? Check out some of my blog posts about Chattanooga's historic neighborhoods. Consider where you work, where your kids go to school (or where you'd like them to), what amenities you want close by, what kind of vibe you'd like your new neighborhood to have, etc. Your must-haves & must-not-haves will factor into this. If your main concern is wooded privacy and room to spread out you probably shouldn't be looking in Highland Park. If, on the other hand, you want to be in the middle of Chattanooga's nightlife, a Market Street condo might be the way to go.If you don't know anything about Chattanooga or its real estate market, a good Realtor (like me!) can help you narrow down your search.
4. Think about what your budget should be. In this case, think of it in terms of a monthly payment, not a purchase amount (we'll get to that part later). Don't try to decide the most you want to pay, decide what you are comfortable paying each month. Are you going to be cooking steaks in your new kitchen or throwing ramen noodles in the microwave? You also need to realize that the monthly payment on the loan isn't going to be your only expense. There will also be property taxes, home owner's insurance (sometimes called hazard insurance), mortgage insurance if you aren't putting down a 20% down payment, not to mention potential repairs. Budget tip: Looking outside the city limits can sometimes stretch your dollars because you won't be paying city property taxes.
5. See, this isn't that hard so far! Your next step is to find a Realtor - luckily, if you're in the metro Chattanooga/NW Georgia area you can go ahead and check this one off your list by going here. If you live in Kalamazoo, you've got some looking to do. What should you be looking for? Number one: someone who answers the phone. I know it sounds simple but you would be surprised how hard it can be to get someone to return a call. Number two: someone who knows the area. Number three: someone who isn't the name on the sign sitting in the yard of a house you think you might like. Chances are, unless it is a limited service listing like some of mine, that person is working for the seller. It usually doesn't cost you anything more to have your own agent looking out for your best interests so why not make sure you have your own representation?
Stay tuned for Part II of Chattanooga Real Estate 101...
This is part I of my series on how to do just that: Chattanooga Real Estate 101
1. Unless you have the purchase price of a house hidden in your mattress, you are going to need to get your credit in order. Click here for more information about how to do this. Start on this at least 3-4 months before you are going to be looking to buy. You often will find errors on your credit report that can take a while to be corrected. You don't want to be scrambling to fix these things while a mortgage broker is staring you in the eye.
2. Make a list of "must-haves," "like-to-haves," & "must-not-haves." Do you have a Great Dane, an Irish Wolfhound, a Husky and a Chocolate Lab? You're probably going to have to have a fenced yard. If, however, Fido is a Pomeranian, that fenced yard might be nice to have but not essential.
3. Think about what areas you might like to live in. Interested in a historic home? Check out some of my blog posts about Chattanooga's historic neighborhoods. Consider where you work, where your kids go to school (or where you'd like them to), what amenities you want close by, what kind of vibe you'd like your new neighborhood to have, etc. Your must-haves & must-not-haves will factor into this. If your main concern is wooded privacy and room to spread out you probably shouldn't be looking in Highland Park. If, on the other hand, you want to be in the middle of Chattanooga's nightlife, a Market Street condo might be the way to go.If you don't know anything about Chattanooga or its real estate market, a good Realtor (like me!) can help you narrow down your search.
4. Think about what your budget should be. In this case, think of it in terms of a monthly payment, not a purchase amount (we'll get to that part later). Don't try to decide the most you want to pay, decide what you are comfortable paying each month. Are you going to be cooking steaks in your new kitchen or throwing ramen noodles in the microwave? You also need to realize that the monthly payment on the loan isn't going to be your only expense. There will also be property taxes, home owner's insurance (sometimes called hazard insurance), mortgage insurance if you aren't putting down a 20% down payment, not to mention potential repairs. Budget tip: Looking outside the city limits can sometimes stretch your dollars because you won't be paying city property taxes.
5. See, this isn't that hard so far! Your next step is to find a Realtor - luckily, if you're in the metro Chattanooga/NW Georgia area you can go ahead and check this one off your list by going here. If you live in Kalamazoo, you've got some looking to do. What should you be looking for? Number one: someone who answers the phone. I know it sounds simple but you would be surprised how hard it can be to get someone to return a call. Number two: someone who knows the area. Number three: someone who isn't the name on the sign sitting in the yard of a house you think you might like. Chances are, unless it is a limited service listing like some of mine, that person is working for the seller. It usually doesn't cost you anything more to have your own agent looking out for your best interests so why not make sure you have your own representation?
Stay tuned for Part II of Chattanooga Real Estate 101...
Friday, May 1, 2009
First Time Home Buyer Alert!
THDA, Tennessee Housing Development Agency, has introduced their anticipated second mortgage program. The program is designed to be used in conjunction with the stimulus tax credit for first time home buyers. The purpose is to assist potential home owners by providing a no interest loan which will enable many first time home buyers to purchase a home with little or no cash out of pocket. THDA recommends that borrowers use their tax credit to pay the loan off, when the credit refund is received.
Some details:
The THDA second mortgage is for the down payment. It is only available with an FHA loan closed with the THDA Great Rate or THDA Great Advantage programs.
The minimum credit score is 620.
THDA's maximum income & purchase price limits apply.
The program is offered to first time home buyers.
If the borrower decides not to repay the second mortgage with their tax refund, payments can be made. The loan is interest free until June 1, 2010. At that time the loan will convert to a 10 year term with an interest rate 1% above the first mortgage rate.
For the THDA Great Rate program, the current interest rate is 5.55%.
For the THDA Great Advantage program, the current interest rate is 5.85%.
The second mortgage can be used for downpayment or for closing cost, but is in the amount of the 3.5% FHA minimum down payment. The second mortgage can be used with other sources of closing funds that are acceptable to FHA: gift funds, seller paid costs, and of course the 2% grant from the THDA Great Advantage program.
More details on THDA programs are posted here.
If you have any questions about eligibility for this program, please contact me for more information.
Reprinted with permission from Richard Smith, American Acceptance Mortgage, Inc Chattanooga, TN (888) 474-9920 x 15
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