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If buying a home has seemed like a dream to you and you are just not sure how or if you would be able to purchase a home here are some key tips to help you go from merely dreaming of buying a home to actually buying a home:
1. First and foremost evaluate your financial situation. Examine your finances by determining how much money you have left over in your month after paying all of your expenses and evaluating your savings account. If you are able to comfortably pay your bills each month without any late fees this is very positive and shows that you are financially stable. A good rule of thumb for your savings account is to always have a 3 month emergency fund saved at all times. The emergency fund should cover ALL of your bills in the event that you had to go 3 full months without pay for any reason. If you look at these areas and determine you don’t quite make the mark don’t completely rule yourself out, make some financial adjustments to determine how to reduce your debts and build your savings.
2. Next you want to check your credit report. Mortgage lenders do not mind pulling your credit and reviewing it with you, so ask a Realtor to refer you to a good lender. Most require a minimum of a 640 credit score in order to purchase a home these days. If your credit has a few areas that need improvement decide on a good plan with your lender to improve your credit to achieve your target credit score. Because lenders deal with challenging credit situations daily they are very well equipped with ways to help you improve your score. One of the biggest mistakes people make is not speaking with a professional about their credit. Without making improvements on your credit homeownership will only remain a dream. Lenders will help you, call one today to get started on your path to home ownership.
3. Make sure you have fees other than your emergency funds set aside to cover the costs of your loan closing and your down-payment. The average amount of closing costs and pre-paid items needed to cover your closing are approximately 4% of your loan amount. Sometimes the seller will help you off-set some or all of these expenses by contributing towards your closing costs but this is not always the case. Your down payment (in addition to your closing costs and pre-paid items) can range from 0-20% depending on your loan type. One of the most common loans used for home owners planning to occupy the residence is an FHA loan. This loan requires 3.5% of the loan amount as your down payment. If you are a veteran using your VA loan or approved to buy a home in a USDA area your down payment could be as little as 0%. A lender is also the one to speak to on this matter; they will help you decide which loan type best fits your situation.
4. Find a REALTOR! A Realtor has access to all home listings. They can show you all properties and can adjust the search to fit your desired specifications. Your specifications can include things such as price range, location, number of beds/baths, square footage, school zones, etc. One of the best things about a Realtor is that it’s FREE to use one as long as you buy a property listed with a Real Estate Company. Realtors are well trained on Real Estate contracts, negotiations, and the local market. Find one that fits your personality and understands your wants and needs. Then enjoy the process as your Realtor works hard to find you the home of your dreams.
Don’t be afraid to make your dream of home-ownership a reality. Use these first time homebuyer tips to help you get started today. 2012 is a great time to buy your first home. Rates are still at an all-time low and the market is full of wonderful homes in all price ranges. Enjoy the process, it’s an exciting experience!
Amie Bozeman, Atlanta Real Estate Pro