Tips for Home Buyers

GETTING STARTED
Tips for Homebuyers

1. HOW DO I KNOW IF I'M READY TO BUY A HOME?
You can find out by asking yourself some questions:
§ Do I have a steady source of income (usually a job)? Have I been employed on a
regular basis for the last 2-3 years? Is my current income reliable?
§ Do I have a good record of paying my bills?
§ Do I have few or no outstanding long-term debts, like car payments?
§ Do I have money saved for a down payment?
§ Do I have the ability to pay a mortgage plus additional costs every month?
If you answer to these questions is "yes", you are probably ready to buy your own home.
2. HOW DO I BEGIN THE PROCESS OF BUYING A HOME?
Start by thinking about your situation. Why do you want to buy a home? How much can
you afford in a monthly mortgage payment (see Question 4 for help)? How much space
do you need? What areas of the town do you like? After you answer these questions,
make a "To Do" list and start doing casual research. Talk to friends and family, drive
through neighborhoods, search for new listings on search engines (Yahoo and Google),
and look in the "Homes" or “Real Estate” section of the newspaper.
3. HOW DOES PURCHASING A HOME COMPARE WITH RENTING?
The two don't really compare at all. One advantage of renting is being generally free of
most maintenance responsibilities. But by renting, you lose the chance to build equity;
take advantage of tax benefits; and protect yourself against rent increases. Also, you
may not be free to decorate or remodel without permission and may be at the mercy of
the landlord.
Owning a home has many benefits. When you make a mortgage payment, you are
building equity. And that's an investment! Owning a home also qualifies you for tax
breaks that assist you in dealing with your new financial responsibilities: like insurance,
real estate taxes and upkeep, which can be substantial. But given the freedom, stability,
and security of owning your own home, the new responsibilities are worth it.
4. HOW DOES THE LENDER DECIDE THE MAXIMUM LOAN AMOUNT THAT YOU
CAN AFFORD?
A lender looks at what is known as debt to income ratio. For most lenders, this is 50% of
your gross income. Take your income before taxes and divide it in half. Your mortgage,
taxes, insurance and other monthly payments cannot exceed this number.


The amount of money that you can borrow is also a measurement of your risk. The lender
will look at credit, employment, income, assets, equity, etc.


5. HOW CAN I DETERMINE MY HOUSING NEEDS BEFORE I BEGIN THE SEARCH?
Your home should fit the way you live: with spaces and features that appeal to the whole
family. Before you begin looking at homes, make a list of your priorities: things like
location and size. Should the house be close to local schools, your job, or public
transportation? How large should the house be? What type of lot do you prefer? What
kinds of amenities are you looking for? Establish a set of “minimum requirements” and a
'wish list." “Minimum requirements” are things that a house must have for you