You are finally ready to make that commitment and buy your first home. Maybe you are tired of paying rent or just landed that job that allows you to afford a home. Whatever the reason, there are some questions to ask yourself when being a first time homebuyer.
1. How much can you afford? This one is obvious but people can get tempted into buying more home than they can afford. Determine first how much you can afford before looking around at homes so this temptation doesn’t cause you to over buy. Mortgage companies can assist you in assessing what you can afford based on your income, credit rating, current monthly expenses, what kind of down payment you have and what the going interest rate is. You will also want to ask about tax credits and first time homebuyer assistance.
2. Shop For A Loan – Talk to several lenders, compare costs and interest rates. When looking for a loan, be aware there are predatory lenders out there. What should you watch out for when it comes to predatory lending? Predatory lenders, appraisers, mortgage brokers and home improvement contractors are those who:
a. Sell properties for much more than they are worth using false appraisals.
b. Encourage borrowers to lie about their income, expenses or down payment so that they can qualify for a loan.
c. Knowingly lend more money than a borrower can afford to repay.
d. Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
e. Charge fees for unnecessary or nonexistent products or services.
f. Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments and steep pre-payment penalties.
3. Learn about homebuyer programs – Ask about FHA loan programs, which offer lower down payments. If you qualify, there are also Hurricane Evacuees discounted sales, Homeownership for Public Housing Residents programs and Indian Home Loan Guarantee Programs. FHA loan programs offer lower down payments and are a good option for first-time homebuyers.
4. Shop For Your Home – Find a realtor who you trust and who can help you meet your needs and not oversell a home to you. You might even ask realtors for references. Put together a wish list for your realtor so that they can only find homes that meet your criteria. In addition to price maybe you have a specific location you are interested in, a number of bedrooms or the size of garage you need. Tell your realtor if you are interested in buying a fixer-upper or one that is newer. Manufactured or mobile homes can be affordable, talk to your realtor about the plusses and minuses in buying these types of homes. Also ask about HUD homes and whether you qualify to buy one and which homes in your area are on the HUD homes list. If you are interested in building your own home, there is much to take into consideration here as well, something to be discussed with your lender and your realtor. A good real estate agent will listen to your needs and wants and arrange to show you only those homes that fit your particular criteria.
Now to pick out that right home and what to do before closing on your home. See Part II, “Picking Out That Right Home For You.”
Ron Scott is owner of MyExpressHomeLoans.com, a provider of your Austin Home Loan as well as high quality financial services. Our mortgage professionals will work to ensure that you get an Austin mortgage that is tailored specifically to meet your needs. For more information please visit http://www.MyExpressHomeLoans.com.
