Perform Due Diligence

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Although preparing for the task at hand will at times seem not only daunting, it can also be down right confusing. Mother ducks attempt to create order out of chaos by lining up all her ducklings behind her, and believe it or not, she knows exactly how many she’s got and where they are at all times. It allows her to watch and protect her brood by creating order.

Herein you will discover many of the tasks you’ll be facing in the weeks and months ahead, so it will be necessary to do a lot of preliminary gathering — putting your ducks in a row — to make your quest to find that perfect home, regardless of whether it’s your first home, or that dream home you’ve worked hard for, it will make your journey much less arduous, a whole lot more enjoyable, and the benefits you’ll reap you’ll discover were worth all the preparation.

Eight Simple Steps to Buying Your Home

Buying a home is one of the biggest decisions that you will ever make. It is important to take this decision seriously. You need to take the time prepare yourself in every aspect in order to make your home a blessing, and not a negative experience. Here are the basic steps that you should hollow when it is time to buy a home.

1. Are You Ready?

First you should determine if you are ready to buy a home. Home ownership is a lot more expensive than renting. You are responsible for paying for all the repairs. You may also have added utility costs, such as garbage and water. In addition to that you will need to pay for taxes and insurance related to your home. These costs add up quickly, and if you are not financially prepared, you may end up in a very negative position. You should take the time to get out of debt and save up an emergency fund, before you purchase your first home. You should definitely get rid of all of your credit card debt first.

2. Start shopping for a loan.

You need to get pre-approved before you shop for a home. This will help you to search and stay within your price range. You should contact at least three people before you decide which loan to take. A mortgage broker will look at several different loan companies to find you the best rates. However, your small local bank or your credit union may have options that will save you money as well. Once you find a loan with the correct terms you can begin shopping.

3. Be Aware of the Various Types of Mortgages

When it comes to your mortgage you may be surprised at the different loan types and payment options available to you. It can be baffling when you think about ARMS and PMI. Usually a fixed rate fifteen or twenty year loan is the best option. This can help you lock in a low rate. You may be considering creative financing to cover the down payment, but you should be careful when you make these choices. You want to build wealth with your home purchase. If you make the wrong choice than you may end up hurting yourself financially.

4. Buy Only What You Can Afford

You also need to determine how much home you can really afford. A good rule of thumb is to keep your mortgage along with your taxes and insurance between twenty five and thirty percent of your income. Other experts advise that your home cost be limited to two and half times your annual salary. It can be crippling if you are house poor. If you spend too much on your mortgage you may not be able to meet your daily obligations let alone save for retirement. A smaller house is worth the peace of mind.

5. Find a Good Realtor

Once you have determined how much you can really spend and are pre-approved you should find a good realtor®. Your realtor should listen to your wants and needs carefully. She may make recommendations or explain the market to help you find a home that suits your needs and that you can afford. She should offer several different options. Once you make an offer your realtor should work to negotiate terms that you are happy with. A good way to find a realtor® is through the recommendations of friends and colleagues.

6. Inspect What You Expect

Another important step is a thorough home inspection. This is different from an appraisal. You should pay for the home inspection. The home inspector will look for hidden problems with the home. Through the home inspection you can learn about any issues that may prevent you from buying the home. This may include mold problems, termites, foundation problems and a bad roof. The inspection can save you thousands in repairs later on. Additionally you may be able to negotiate a lower price if you know the home needs a new roof.

7. Prepare ALL the Necessary Documents

Once you have bid on your home and the offer is accepted you will go into escrow. The escrow holder will work to make sure that all the documents, money and other necessary information is together before you close. Escrow is set up to protect the buyer, the seller and the lender. It can take time to complete escrow, although the time really depends on circumstances around your purchase. Once everything is completed for escrow you will sign the closing papers. You may or may not sign your mortgage papers at escrow. If you do, you can request that the bank send a representative to help you fully understand your loan.

8. Taking Ownership

Once you have closed on your home, it is time to move in. You can paint, unpack and enjoy your new home. Be sure that you change your address with your bank, and other accounts. You can set up your utilities and cancel your old ones as well. This will save you time and money, because you will avoid late fees. Some companies will waive installation fees if you transfer your old account to your new address.

Three Very Important Tips

1. It is important to realize that you need to include the cost of taxes and homeowner’s insurance into your monthly housing cost. With the insurance and taxes your monthly housing costs should not be more than thirty percent of your monthly salary.

2. Additionally you should be prepared to pay for all of your closing costs out of pocket. This will save you money over time. If you are finding it difficult to save up for closing costs you may not be ready to purchase a home.

3. Be sure that you can afford your home payments, don’t stretch yourself because you may end up losing your home, which can destroy any good memories you have of your home.

Getting Prepared

First Time Buyers

Renting vs. Owning

How Much Do I Need

What Can I Afford?

Income vs. Debt Ratios

Estimate Your Buying Power

Understanding Your Credit Score

Examining Your Credit History

Getting Pre-Approved

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