Am I ready to be a homeowner?
If you think you are prepared to take the leap from renter to homeowner, then it is important to take a financial inventory of your lifestyle, debts and assets. Are you gainfully and reliably employed? Lenders look for those who will pay their loans payments on time, and consistent income is a must to qualify. Do you have enough money saved to put up a down payment? The down payment should be a minimum of five to 10 percent of the real estate property purchase price. Your credit score should be in at least fair to good shape and only contain a few outstanding debts that can be easily resolved. Your payment history should show a good record of payments being made on time.
What is the lender's formula?
The lender's formula is a complex configuration of debt-to-income ratio, available credit and score, credit history and the amount of available cash for the down payment and closing costs, as well a few other numbers.
What do I look for in homes?
Is the home large enough to fit your needs, both now and in the future? Is the structure compromised in any way? Imagine the home throughout the seasons with all of your belongings inside. Ask questions of the homeowner. Are the appliances going to stay? What, if any, have been ongoing maintenance issues? What is the neighborhood like? What is the reputation of the local schools? Some of these details can only be found out by talking to the homeowners themselves, so don't be afraid to ask.
Do I need a home warranty?
The decision to invest in a home warranty for the purchase is entirely up to you, the buyer. A home warranty provides coverage on appliances and specific items for a specific amount of time, typically at least a year. Many first-time home buyers purchase a home warranty so they are covered immediately after making their home purchase. This is smart, as finances may be thinner during this time, and in the event of unexpected repairs or replacements, the warranty will kick in to save the day.
What is pre-qualifying versus pre-approval?
Before setting up any appointments to view homes for sale with a real estate agent or homeowner, find out the likelihood of you being able to get approval for a home loan. In pre-qualification, you are given an estimate of what you may be able to borrow based on limited financial information provided in a form. This is an easy way to determine how much you could possibly spend on your real estate home purchase. To be pre-approved means a financial institution has agreed to work with you and has already taken a deep view into your financial situation. Pre-approval gives potential home buyers more solid answers on how much they can afford during the home buying process.