1. Decide what you can afford. Generally, you can afford a home
equal in value between two and three times your gross income.
2. Develop your home wish list. Then, prioritize the features on your list.
3. Select where you want to live. Compile a list of three or four
neighborhoods you’d like to live in, taking into account items such
as schools, recreational facilities, area expansion plans, and safety.
4. Start saving. Do you have enough money saved to qualify for
a mortgage and cover your down payment? Ideally, you should
have 20 percent of the purchase price saved as a down payment.
Also, don’t forget to factor in closing costs. Closing costs —
including taxes, attorney’s fee, and transfer fees — average
between 2 and 7 percent of the home price. If your a first time
home buyer you can purchase a home using FHA. You will
need down payment of 3.5% of the purchase price.
5. Get your credit in order. Obtain a copy of your credit report
to make sure it is accurate and to correct any errors immediately.
A credit report provides a history of your credit, bad debts, and
any late payments.
6. Determine your mortgage qualifications. How large of mortgage
do you qualify for? Also, explore different loan options such as 30-year
or 15-year fixed mortgages or ARMs — and decide what’s best for you.
7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You will need W-2 forms, copies of at least one
month of pay stub, and copies of two to four months of bank or credit union statements.
8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your first home without paying a penalty for early withdrawal. You maybe able to receive a gift from a family member.
9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.
10. Contact a REALTOR®. Find an experienced REALTOR® who
can help guide you through the process.
