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10 Steps to Prepare for Homeownership

1.      Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2.      Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.

3.      Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.

4.      Determine if you have enough saved to cover your downpayment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 7 percent of the home price.

5.      Get your credit in order. Obtain a copy of your credit report.

6.      Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.

7.      Organize all the documentation a lender will need to preapprove you for a loan.

8.      Do research to determine if you qualify for any special mortgage or downpayment-assistance programs.

9.      Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.

10.  Find an experienced REALTOR^Ò who can help you through the process.  Your Realtor can suggest several lenders that they trust to help you learn about the lending process, and to determine what loan products fit your specific needs.  The lender should provide you with a good faith estimate on the home you select.  This document will show you the exact costs of your loan, how much money you will need on the day of closing, and approximately what your monthly payment will be (including taxes and insurance).  Your Realtor will be glad to review these materials with you and to advise you on the overall lending process.