Are you a renter? Would you like to know how easy it is to occupy your first home? Would you like to enjoy tax deductions as a homeowner? Would you like to paint and garden without having to ask for permission from your landlord?
Here is homeownership made simple:
Step 1: Consult a local loan officer. You can consult a loan officer where you bank. Be sure to ask if they have experience with first-time homeowner programs. They will run your credit and discuss what you can qualify for. The FICO score required for most loans is 640. Sometimes, your loan officer will suggest what to do to raise your FICO score.
Now that you know how much of a house you can afford to buy, your loan officer will discuss with you various loan programs, down payments, current interest rates, etc. Your monthly payment is made up of PiTi, which stands for principal, interest, taxes and insurance. Your experienced loan officer will provide a printout of this, or ask for three different sale prices. For example, if you qualify for a $150,000 loan, ask for payments on a $130,000, $140,000 and a $150,000 sales price.
Step 2: Decide on where to buy your first home. Most renters who have been living in a certain area know whether they want to stay in the same area. If you love your neighborhood, of course it make sense to stay. However, many first-time buyers who want to start a family might want to choose to live in a school district close to their work. Some buyers prefer to live near family in another neighborhood.
Keep in mind that some newer homes have a monthly homeowner’s fee and higher property taxes. All these extra payments will drive up your monthly mortgage payment.
Step 3: Work with an experienced real estate agent who knows the area where you are interested in buying. Ask about the school, shopping and other information important to you. Check out their website and read the client testimonies. Make an appointment to discuss your needs and wants with your agent. Take the time to understand the distressed market. Most homes are short sales that take an average of four to six months to get into. Ask how often you will get an update on how your short sale is progressing during this long waiting period. Ask how to get out of a short sale if you are tired of waiting and want to make offer on another property instead. Know your rights on foreclosures, short sales and regular sales.
Step 4: Take a deep breath. When all the homework is done, it is time to go shopping. Most women love to shop and men do not. If you are shopping with your boyfriend or husband, you might want to schedule up to fives homes maximum at each shopping trip. It is difficult to remember all the different features, colors, layouts and upgrades after the fifth house. Or take a lunch break to refresh your memory before seeing the next five homes.
Step 5: When a certain home jumps out and grabs your attention, it is time to make a choice. It is located in an area that you want, it is in good condition and it is priced right for the neighborhood. Be sure to make a decent offer and start the waiting period for your approval. When your approval comes, you can perform your appraisal and inspections. Take the time to understand what the home inspection is describing regarding minor and major repairs that might be required — and whether you can live with these repairs that need to be done once you get into the house.
Is now the best time to occupy your first home? Yes. The current interest rate is less than 4 percent. There are loans available that do not require a down payment. There are down payment assistance programs available. All of these loans have one thing in common: They all have fixed rates. And with home ownership, there are no landlords waiting to raise your rent on the first of the year, you get pride and freedom of home ownership and you can enjoy additional tax deductions and home equity.
Annie Christian is a real estate broker and owner of The Annie Christian Real Estate Group. She helps with everything from buying and selling to foreclosure and short sale. To submit a question, call 351-5117. Her website is www.anniechristian.com.