Five Steps Toward Home Ownership

If owning a home is in your future, make sure you read this

11/14/2013 11:47:54 AM
The idea of buying a home can seem overwhelming at first. Breaking down the process into smaller steps allows you to analyze each part of the challenge separately in order to determine whether home ownership is right for you. For some people, owning can cost about the same as, or even less than, renting. These five steps will take you through the process.

Analyze Your Hopes and Needs

5 Steps to take towards owning your own home.Take into consideration the way your life and your family’s lives would be impacted by the purchase of a home. Location may be the first aspect you consider. Would you need to move out of the area in which you are renting in order to afford a home or to find a property that you can grow into? A change of location can impact commutes, proximity to friends and family, and the ability to find a job. Size is another factor to consider. Will your lives run more smoothly with more space or with amenities like a garage, pool, or backyard? Also consider the budget. Are you interested in a mortgage that is higher than your current rental rate, and how will this affect your other monthly budget items? A great first step is to look at the monthly costs of home ownership, including mortgages and taxes, in your areas of interest.

Know Your Finances

Once you have an idea of what you are looking for, you need a clear picture of your finances. First things first: you need to check your credit score. Next, make a complete survey of your income and monthly expenses to figure out what kind of monthly budget you can afford.  Our free mortgage and loan calculators can help you calculate your mortgage payments.

Find a Lender

After you’ve completed these personal steps, it is time to bring in the professionals. When you choose a lender, it will work with you to determine your budget and to figure out what type of loan best meets your needs. Your financial institution will also help you map the necessary steps for improving your credit so you can qualify for and finance your dream home at an affordable rate. Tara-Nicholle Nelson, a real estate broker and attorney, cautions, “Some credit actions have counterintuitive impacts on your credit.” She suggests consulting closely with your lending institution before doing anything like paying off all your credit cards.
Developing a relationship with a lender before falling in love with a house can help to avoid the heartache that comes from having eyes larger than your wallet. Once all these factors are in check, you can apply for loan pre-approval.

Meet With a Real Estate Agent

Once your finances are settled, you are set to find a real estate agent. Your real estate agent will reconcile your financial profile and the amount of your down payment with your wish list. He or she will also help you navigate the careful budget-balancing act that occurs between location, size and amenities in order to keep you within your price range.

Find the Home

Finally comes the fun step, or at least the step that is fun the first 10 times: viewing homes. Once you find a good candidate, you will need to make an offer. The advice of your real estate agent is invaluable during this step. This is because he or she knows exactly the types of offers that are being accepted for comparable homes and will help you find a number that will allow you to save the most without having your bid rejected. If your offer is accepted, you will need to finalize your financing and accomplish several tasks with the help of your real estate agent, such as completing the inspection and getting insurance.