I Want to Buy a Home, But Where Do I Start?

     So you want to buy a house. Great, you should buy one. Homeownership is wonderful. A home provides many things: security, tax benefits, credit history, “roots”, pride, liberty, and safety. It also brings some responsibility and can even lead to financial problems if you aren’t careful. To make sure you get off on the right foot there are a few things you ought to consider doing to find a home that is right for you.

     The reality of how most people start the home buying process is by searching online for homes for sale. According to the National Association of Realtors, nearly 80% of those starting the home buying process start their search online. While it is nice to dream and get excited about homes to buy, you will do your self a huge favor if you figure out the price range that you qualify for first. In fact, a good real estate agent will make sure that have already been at least pre qualified if not already pre approved. Read more about getting pre qualified versus pre approved.

Steps to Take Before You Shop or Speak to a Mortgage Company

• Check out your credit report. You can your credit report and scores in many places on the internet or go to our credit services section: Get Free Credit Report. You will find more information about your credit report in this section.



• If your credit scores are anything less than 620, start looking at ways to improve your credit and scores. You might need to establish more credit, or repair what you have. See our sections on: establish credit and credit repair.



• If your scores are higher than 620, gather up your last 30 days of paystubs, your last year’s W-2, and your last two months of bank statements (if you don’t have a bank account - start one immediately. If you are self employed or you are a commissioned sales person, gather up your last two years of full tax returns.



• Start saving money - stay home for dinner an extra night of the week. Pack your lunch, turn off more electricity when you are not using it, wash your own car, make your own coffee (sorry Starbucks). The more you have in the bank the better. Even if you don’t use it for the home purchase, you’ll want money once you move in to purchase new furniture etc.



• If you are buying your first home then learn more about the home buying process and home ownership and especially read up on FHA Loans.



• No matter whether this is your first home or a move home, or even a vacation home you should get educated on loan programs and control your own destiny. .






Find a Mortgage Company and Get Pre Approved

• Talk to some mortgage companies. You will find plenty of choices for lenders advertising on GetPreQualified.com. You can also ask the real estate agent you decide to work with if they have any recommendations for lenders to work with. If you have done your homework, it shouldn’t matter who you pick to get your mortgage with. Most problems with mortgages are preventable with some education. Our recommendation is that you speak to at least three different mortgage companies to compare rates and programs.



• To get the best results, each mortgage company will need to look at your credit report as well as get a full loan application from you. Let a few mortgage companies pull your credit – It is ok. There is a horrible myth and sales tactic out there that sounds like this: “don’t let anyone else pull your credit or your scores will go down.” If you are told this by a mortgage person, just hang up. They don’t know what they are talking about. You have a certain time frame allowed by the credit bureaus that allow you to shop for a mortgage without penalty.



• Say the same thing to each mortgage company - Make sure you tell each mortgage company the same thing so that you get offers that you compare. If you tell one company something that you didn’t tell another company, tell the other company what you didn’t tell them so you get similar offers. Who knows, that company who you didn’t tell might come up with a better offer.



• Get a Good Faith Estimate - For any mortgage company that pulls your credit - get a Good Faith Estimate from them. They actually must give you one within three days of pulling your credit if you give them a property address of the place you are looking to purchase. This is federal law. If they won’t give you a Good Faith Estimate stop working with them. Review the costs of buying a home – getting a mortgage.



• Look for First Time Home Buyer programs. Some of these include: down payment assistance programs, city and county down payment grant programs, Community Reinvestment Act loans (banks are good for these), and programs found at FHA, VA, Fannie Mae and Freddie Mac.



• Make sure you don’t borrow more than you are comfortable with. Chances are you can qualify for more of a monthly payment than you’ll want to make. Stick to your guns. A general rule - don’t let your house payment be more than about 35% of your monthly gross income. You can go over, and you’ll probably qualify going over that, but pay attention to what your gut says. Our rule of thumb is, don’t rely on the future in terms of a pay raise - what if you don’t get it?

     That’s it for this list. This is a good list of items to consider to get you started on buying a new home. If you have a question that you cannot find an answer for, please ask EdGAR. Happy House Hunting!