Buying Your First Home

There are many things to think about when you are considering buying your first home. The first thing is to determine what price home you should be shopping for. There is a generally accepted guideline that states that your home should be no more that two and one half times the gross wage of the borrower. For example, if your gross salary is $40,000 .00 per year your calculation would be $40,000.00 x 2.5 = $100,000.00, therefore your upper limit price range for your home would be $100,000.00. There are other ingredients that you must add to the mix. Calculate your monthly payment, add your cost for taxes and insurance (and if some cases mortgage insurance) and you have your monthly housing expense. You must also take into account the other expenses you have every month for other loans, credit cards, utilities, food, and transportation expenses. This is a pre-qualification exercise that is essential to determining if you are ready for home ownership. A mortgage professional can assist you with this process. Your second step should be to consult with a lending professional to apply for a mortgage and receive a pre-approval for your home loan. The pre-approval informs sellers that you have taken care of your homework and you are ready to purchase. In addition, it will strengthen your position as a buyer. Your loan officer will collect information concerning your employment history, your current income, and your credit history and will analyze that information and produce a lending decision. If your information is generally positive you qualify for a home loan and you can go house hunting. Your third step is to find a home and there are a couple of options available to you. You can search on your own by scanning newspapers and other media sources or you can enlist the no cost assistance of a realtor. The choice is yours but seeking the counsel of trusted family members or friends will likely help you with that decision. The fourth step is to draw up a contract on your home of choice and deliver it to your lender for underwriting and final approval. Your lender will take over the process from there and carry the loan through to funding by: ordering abstract and title work; tile opinions; appraisal; tile insurance; insurance verification; and a myriad of other details that make up the lending process. The last step in this illustration is to meet with all of the individuals involved in your transaction, sign your note, mortgage, and a lot of other papers, get the keys to your house, call all of your friends and family members who have pick-ups, and move in. Congratulations and welcome to your new home!