I created this blog to have a place to share information, ideas, thoughts, and experiences, not necessarily just about real estate, but also life in general.

November 13, 2012

Decide To Buy Your Home. Step #1

Deciding to Buy - Buying Your Home Step #1
If you are paying rent, you very likely can afford to buy. Base your decision to buy on facts, not fears.

I can probably fill this page for all the reasons and benefits why you should buy a house. But what stands out is the idea of wealth building and the fact that, as a homeowner, it is still one of the best tax benefits you can have.

While I also believe there is never a wrong time to buy the right home, there are concerns that most first time buyers or previous home owners have when they think of buying a home. Let’s address a couple of the most common concerns.

Less-than- perfect FICO score (Fair Isaac Corporation)
FICO score is most commonly used by banks and financial institutions in determining the creditworthiness of consumer. FICO scoring range is 300 and 850. A low credit score may not necessarily mean you won’t be able to get a loan, but, in most cases, it will affect the type of loan or interest rate they can offer you.

First step to take is getting a copy of your credit report from the 3 major credit reporting agencies: Equifax, Experian and TransUnion. These 3 companies have set up AnnualCreditReport.com as a centralized location where consumers can request and obtain free access to credit reports every 12 months in accordance to the Fair and Accurate Credit Transactions Act of 2003 (a Federal Law passed as an amendment to the Fair Credit Reporting Act)

It’s good to know what’s being reported on your credit, correct or remove erroneous ratings from your record on your record, and if need be, start taking steps to improve your credit scores. Watch for my post on how to improve your credit score in the next a couple of weeks, maybe sooner.

Note: these major credit agencies market this scores generated with their data differently, and there are compensating factors some financial institutions may be willing to consider. Don’t let a less than perfect score stop you from buying a home.

Lack of Downpayment
Next step is to look at your liquid assets: savings accounts or bonds, term deposits, or anything that you can readily access or turn into cash easily.

Loan programs are available for as little as 3%, an example of government programs:
  • VA (Department of Veterans Affairs)
  • FHA (Feeral Housing Administration)   
  • HomePath  (Created by Fannie Mae)

Your local banks, savings and loans, credit unions and loan brokers are a good source too, as they typically have comparative loan programs to what the government loans are offering. Please be careful about Internet based companies. Remember: for most of us, buying a home is probably the only major investment we will make in our lifetime. You would want to be able to sit down, shake hands and meet eyeball to eyeball with the person you entrust to handle it for you.

I am not saying you shouldn’t shop loan programs or interest rates on-line. In fact I totally encourage it. However, have your loan officer check it out. Most of the time, your bank or loan broker may have a similar program or may even be able to offer a better one for you.

Once you’ve gone through these first steps, you’ll find that buying a home is not that complicated and not necessarily intimidating. Your first home may not be your dream home, but it’s a major step towards getting it.

Next up, connect with a loan officer and a real estate professional to work with you. Make sure you’re choosing one who is actively involved in your local area, or one who is recommended by someone you trust. This is not the time to search the internet or the yellow pages.

If you're in my area, email me if a recommended list of loan officers and loan brokers my clients have happily and successfully worked with (please know these referrals are FREE. It is illegal for me, as a realtor, to receive referral fees or compensations from lenders and financial institutions).

Happy hunting for your new home!

Next: Why Do I Need An Agent? Step #2

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