By Lisa Williams, CRS, GRI, ABR
Williams & Associates Realty
Buying a home is one of the most important and exciting events of a lifetime. But before you begin shopping, the homebuying process requires thorough preparation.
“Education at the beginning of the home buying process is so important to be able to make an informed decision. Customers should be familiar with the stages of the homebuying process and when you are more prepared your experience would be more enjoyable.
Decide what you want
Whether you are a first-time homebuyer or a repeat buyer, you need to ask yourself what you’re looking for in a property. Is a lifestyle change prompting your move? What amenities would you like in a home that you don’t have now? Do you have a purchasing timeframe? How important are local schools, nearby recreational opportunities and community safety?
In short, compile a home wish list. Then, prioritize the features on your list.
Determine what your needs are. Once you’ve done that, you can sign up to receive home listings via e-mail from an area real estate firm in order to familiarize yourself with what’s currently available on the market.
How much can you afford?
Once you know what you’re looking for, you need to figure out how much you can afford. The general rule of thumb when home shopping is to choose a home valued at no more than two-and-a-half times your annual gross income.
Twenty years ago, lenders typically required 20% of the purchase price as a down payment. But innovative loan programs have evolved which require a down payment of as little as three-and-a-half percent. And although lending programs that require no down payment are largely a thing of the past. There are still no-down-payment mortgage options available to select groups like veterans.
Homebuyers also can benefit from tax credits available from the federal government to help stimulate home sales. In November, Congress extended the first-time homebuyer tax credit of up to $8,000 for qualifying home sales through April 30.
Repeat home buyers also are eligible to receive a federal tax credit of up to $6,500. To qualify, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
People don’t realize how many different options are available for borrowing money.
In addition to the down payment, don’t forget to factor in other expenses like closing costs, inspection costs and moving expenses. Similarly, there are additional expenses associated with homeownership beyond your monthly mortgage payment, such as homeowner’s insurance, interest and taxes (which may be factored into your monthly mortgage payment), maintenance costs, utilities, garbage collection fees and unexpected repairs.
Clean up your credit
Before you begin house hunting, take steps to ensure your credit history is as clean as possible. Obtain a copy of your credit report to make sure it’s accurate. A credit report provides a history of your credit, bad debts and any late payments.
Once you’ve reviewed your credit report, correct any errors immediately. The earlier you talk to someone the better. It’s best to be proactive rather than reactive.
Feel free to contact Lisa Williams, CRS, GRI, ABR of Williams & Associates Realty for more information at (414) 463-9948 or www.williams-realtors.com