1) How do I get my Finances in order?
Develop a family budget. Instead of budgeting what you’d like to spend, use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.
Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 percent and 28 percent of income, you need to get the rest of installment debt—car loans, student loans, revolving balances on credit cards—down to between 8 percent and 10 percent of your total income.
Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You’ll probably see some great ways to save.
Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.
Save for a down payment. Although it’s possible to get a mortgage with only 5 percent down—or even less in some cases—you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent down payment.
Create a house fund. Don’t just plan on saving whatever’s left toward a down payment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.
Keep your job. While you don’t need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.
Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.
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2) How big of a Mortgage can I afford?
Not only does owning a home give you a haven for yourself and your family, it makes great financial sense, too.
This calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too.
Rent: _________________________
Multiplier: X 1.32
Mortgage payment: __________________
Because of tax deductions, you can make a mortgage payment—including taxes and insurance—that is approximately one-third larger than your current rent payment and end up with the same amount of income.
For more help, use Fannie Mae’s online mortgage calculatorsat http://www.fanniemae.com/homebuyers/calculators/index.jhtml?p=Resources&s=Calculators
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3) What are some common 1st time Buyers mistakes?
They don’t ask enough questions of their lender and miss out on the best deal.
They don’t act quickly enough to make a decision and someone else buys the house.
They don’t find the right real estate professional who is willing to help you through the home buying process.
They don’t do enough to make their offer look good to a seller.
They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.
Tips for 1st Time Homebuyers
Be picky, but don’t be unrealistic. There is no perfect home.
Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
Get your finances in order. Review your credit report and be sure you have enough money to cover your down-payment and your closing costs.
Don’t wait to get a loan. Talk to a lender and get pre-qualified for a mortgage before you start looking.
Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.
Don’t let yourself be “house poor”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
Don’t be naïve. Insist on a home inspection and, if possible, try and get a warranty from the seller to cover defects within one year on resale homes.
Get help. Consider hiring a REALTORÒ as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.
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4) What should I ask a Home Inspector?
What are your qualifications? Are you a member of the American Association of Home Inspectors?
Do you have a current license? Inspectors are not required to be licensed in every state.
How many inspections of properties such as this do you do each year?
Do you have a list of past clients I can contact?
Do you carry professional errors and omission insurance? May I have a copy of the policy?
Do you provide any guarantees of your work?
What specifically will the inspection cover?
What type of report will I receive after the inspection?
How long will the inspection take and how long will it take to receive the report?
How much will the inspection cost?
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5) Understanding Homeowners Insurance Look for exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These coverage’s must be bought separately.
Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
Understand replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.
Understand actual cash value. If you choose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.
Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.
If you need further help please don't hesitate to call!
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