Purchasing a home is one of the most important decisions that you will have to make during your life time; however the average American moves every five to seven years, so your first home more than likely won’t be your last. Your career, family growth, and an increase or decrease in property value are all factors that may provoke you to sell your home and relocate.

After debating over the responsibilities a home would bring hopefully you will learn that to purchase a home is to invest. A home should always be considered an investment. You are trusting that your home will yield a positive result whether you chose to live it in for 20 years or 2, if at all. Yielding a positive result is viewed differently depending on who you ask. Some believe that simply raising their children in an aesthetically pleasing home yields tremendous results and their profit is just that. Others view owning a home as financially stimulating first and foremost. They project their amount of return basing it on how quickly equity can be accrued in their home. These people are generally investors. More others fall in between wanting both an aesthetically pleasing home as well as wanting a home that will appreciate and financially provide for them later down the road.

The idea of owning a home that belongs solely to you is awarding. No longer are you paying a monthly rent that provides income to your landlord. Instead you are in part paying yourself by generating equity in your home. Below is a detailed list of what I believe you should know before purchasing a home.

What you need to know to start the buying process:

• Purchasing a home is one of the most important decisions that you will have to make during your life time; however the average American moves every five to seven years, so your first home more than likely won’t be your last.

  The idea of owning a home that belongs solely to you is rewarding. No longer are you paying a monthly rent that provides income to your landlord. Instead you are in part paying yourself by generating equity in your home. Below is a detailed list of what I believe you should know before purchasing a home.

  The buying process:

  • Get pre approved for a mortgage and not pre qualified. A pre approval will determine how much a lender is willing to lend you, based on your credit and income. If you can not become pre approved for a mortgage, make sure your mortgage lender explains to you in detail why you were declined. There may in fact be something on your credit report that is invalid and you can start to the process of alleviating that from your credit report. Being declined for a pre approval is not a final judgment. Continue to work on your credit. Settling your collection accounts and paying your bills on time for approximately a year can start to repair blemishes on your credit report.
  • Expect to put down at least 10% in cash of the sell amount of your prospective home plus your settlement costs. Ex: $100,000.00(home) = $10,000.00 (down payment). In some cases a seller’s assist can be obtained. This will help to lower your settlement costs. For FHA Buyer’s the down payment is only 3%.
  • Settlement costs are separate from your down payment. It includes your taxes, mortgage fees, broker fees, title fees, etc. The cost of these fees will depend on the purchase price of your home.
  • Lenders no longer lend 100% LTV (Loan to Value), anywhere from 80% to 95% is normal. 97% if your loan is non conforming and an FHA loan. To qualify for a mortgage with a higher than 90% LTV your credit should be at or above 670, much lower if qualifying for FHA. LTV is simply the amount or percentage that a mortgage lender is willing to lend you toward your home.
  • Find at least two mortgage lenders to speak with. This can only help you.  By doing this you stay competitive through your lender's eyes, and you increase your lending options and banking knowledge.  Be honest with them and let them know that you are looking elsewhere.  Don't forget to ask plenty of questions.   
  • Mortgage lenders will generally request your bank statements (usually for the past 2-3 months), pay stubs, and your last two tax returns when starting your mortgage application.
  • Find a real estate agent to work with. You should feel just as comfortable with them as you do your lender. Ask yourself, are they returning your calls? Are they knowledgeable?
  • Be realistic. If you were pre approved for an amount lower than what your taste acquires you should entertain other options or be prepared to make up the difference in cash when purchasing your home.
  • When your real estate agent begins showing you homes take notes and a camera to take pictures. Remember homes are hardly ever perfect. You might need to do some cosmetics, take up the carpets, and add new cabinets in the kitchen to make it home.
  • Immediately prepare yourself to make an offer on a home that meets your standards. Good homes don’t last long even in a buyer's market.
  
  
  • When making an offer on a property you are expected to put down an earnest money deposit which goes toward your settlement cost and is a gesture of good faith to the seller. Your earnest money deposit is refundable if the agreement is not accepted and considering you are not in default after the agreement is accepted. An example would be if you agreed to make a mortgage application and you failed to do so.
  • If your agreement is accepted then you are well on your way, and your next step will be to complete a mortgage application.
  • It is very very important to remember, not to make any major purchases prior to settlement, such as a car, or even another home. This will adversely effect your buying power.
  • During this time your agent should schedule a termite and home inspection which can be contingent with your agreement. My advice is to get the home inspection before you pay for any other inspections, just in case the home inspection does not go well; however still make your agreement contingent upon both inspections.
  • After your inspections you may want to renegotiate price and repairs depending on the outcome of the inspections. During a home inspection you should be looking out for major repairs, such as the roof and the major mechanics of the home, a tear in a screen door is not a major issue that may justify a credit from the seller or lowering your offer.
  • If all goes well, you should settle within 4 to 6 weeks while working closely with your lender and real estate agent.

  Good Luck!!!