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guide to buying a home

The Ultimate Guide to Purchasing Your Home 2023

Many people strive to own their own home. Homeownership is a pillar in the American dream, and owning a home is often considered a sign of success and accomplishment.

There are many things that come into play when buying a home, though. If you’re looking to make 2020 the year you own your own place, here’s a quick guide to get you on the right track.

Step 1: Find Out What You Qualify For

The first thing to do in the homebuying process is to get pre-approved for a home loan. Once you do this, you’ll know what price range to look within when looking at homes.

There are multiple factors that influence what kind of home loan you can get. Lenders look at factors like your debt-to-income ratio and credit score to determine what kind of loan you qualify for and the value of that loan.

It’s important to check your credit score before applying for a mortgage. According to NerdWallet.com, the lowest credit score needed to purchase a home is 620. If you have a credit score below 620, you greatly lower your chances of getting pre-approved for a home loan.

If you need to work on your credit score, strive to get it to the national average. On average, the typical American has a FICO credit score of 700. The closer your score is to the national average, the better your chances of getting pre-approved for a loan are.

This stage of the homebuying process is extremely important. It’s here that you’ll honestly assess your financial health and how a mortgage could impact it. As of January 2019, American households owed $9.12 trillion in mortgage debt. It’s crucial to honestly assess if you can handle this kind of financial responsibility.

Step 2: Decide What Kind Of Home You Want To Buy

Once you are pre-approved for a home loan, the next thing to do is decide what kind of home you want to buy. The type of home you buy is partially dependent on what kind of loan you get. For example, there are certain requirements that must be met if a home is to be bought with an FHA loan instead of a traditional home loan.

There are multiple kinds of homes you can choose to pursue. These include traditional houses, townhouses, and condominiums. Each kind of home has its pros and cons. For example, if you buy a home, you are responsible for all its maintenance. If you buy a place that’s part of an HOA, such as a townhouse or condo, that maintenance is done for you but you pay for it through HOA fees. Although Americans have a one in five chance of purchasing a home that’s a part of an HOA, it’s truly up to you to decide what kind of home works for you.

Step 3: Hire The Right Real Estate Agent

Once you know what kind of home you’re looking for and how much you can afford, it’s time to hire a real estate agent. Real estate agents are professionals who help you find your ideal home.

There are a couple of key characteristics you should look for in a real estate agent. First, you should look for someone who knows the market inside and out. They should be able to tell you if it’s really the best time to buy a home and what the pros and cons are of buying now.

Second, a real estate agent should be a master negotiator. They will act as the bridge between you and the seller. You’ll want your bridge to be as strong as possible, like the 3D-printed bridge with the record for holding about 250 pounds, the most weight any bridge created by LulzBot 3D Printers has been able to hold. You need your real estate agent to hold firm on deals when they need to. Negotiating with sellers is a part of almost every real estate transaction, so it’s important that your real estate agent knows how to create the best deal possible for you.

Third, it’s important that your real estate agent truly looks out for you and your housing needs. They should be looking for homes that will make you happy and are within your budget. If a real estate agent only sees you as a commission check, then it’s time to move on from them.

Step 4: Search For The Right Home

Now that you have a real estate agent in your corner, it’s time to house hunt.

House hunting involves a lot of time, organization, and patience. You will most likely have to move your schedule around to fit in showings. Once you go to these showings, it’s important to get as much information about the house as possible. If you’re looking at a home that needs to be fixed up, ask if there’s any lead paint in the house. The government banned lead as a paint ingredient because of its health risks back in 1978, but most homes built before then — about 57 million of them — still contain some traces of lead paint. This is crucial information to know, as it will impact whether or not you make an offer.

If you’re looking to buy a home associated with an HOA, do some research on how current residents feel about living there. The area may be nice, but does the association do what it says it will do? How are the neighbors? Do people get loud at night?

For what it’s worth, Americans living in homeowners associations and condominiums have told pollsters they are very satisfied in their communities for the seventh time in 13 years. While this is a promising statistic, it’s important to get a full understanding of the specific place you’re looking to buy.

Step 5: Close The Deal

You found the perfect home. Now, it’s time to close.

There are many moving parts in closing on a home. These include your down payment, closing costs, the date you’re looking to move, and who takes care of repairs between the buyer and seller. It’s important that you work with your real estate agent closely during the closing process, as they’ll help you negotiate deals with the sellers.

This may seem like a stressful part of the home buying process, but it’ll all be worth it once you sign the papers and officially own your own space.

As Mortgage Closing Costs Drop, You’d Better Shop Around

As Mortgage Closing Costs Drop, You’d Better Shop Around

By Crissinda Ponder, Bankrate.com (TNS)

The average total cost a borrower pays to close on a home loan has dropped slightly, an exclusive Bankrate.com survey finds.

Bankrate’s 2015 survey of closing costs shows that closing costs fell 7.1 percent year over year — to $1,847 in 2015 from $1,989 in 2014.

About The Survey

Bankrate requested good faith estimates from up to 10 lenders in a populous city in each state and Washington, D.C., for a $200,000 mortgage. The hypothetical loan was to buy a single-family home for a borrower with excellent credit and a 20 percent down payment.

The averages comprise origination fees charged by lenders, plus third-party costs such as appraisal and inspection services.

Some highly variable costs were excluded — homeowners insurance and other prepaids, discount points, title insurance, and taxes — so your final charges on closing day likely will be higher than the averages found in the survey results.

It’s Gonna Cost More, Though

Variable costs could add up to another $2,500 or $3,000, depending on where you live, says Michael Becker, branch manager for Sierra Pacific Mortgage in White Marsh, Md.

In this year’s survey, average third-party fees rose nearly 22 percent, while average origination fees fell about 22 percent. What could explain why these average fees went in opposite directions?

“I can only speculate, but my best guess is that third-party fees went up because of inflation and an increase in the cost of providing those services,” Becker says. “Origination fees probably dropped because of a drop in mortgage rates.”

Borrowers today are paying less to get a better rate compared with 2014, he adds.

Industry Braces For New Documents

The mortgage lending process is getting a makeover soon, which is intended to change, in the borrower’s favor, the path to homeownership. The “Know Before You Owe” changes also will affect mortgage closings.

As part of the Dodd-Frank Act, the Consumer Financial Protection Bureau, or CFPB, has combined the four forms that borrowers get during the application and closing processes into two simpler documents.

New Documents For Homebuyers

Loan Estimate

– Replaces good faith estimate and Truth in Lending Act, or TILA, statements.
– Given to borrower within three business days of home loan application.
– Lists estimated costs associated with mortgage.
– Easier to compare multiple mortgage quotes.

Closing Disclosure

– Replaces the HUD-1 and final TILA statements.
– Sent to borrower three days before closing.
– Provides details about mortgage terms.
– Lists what is expected of the borrower at the closing table.

The new forms were slated to take effect Aug. 1, but the CFPB has delayed them until Oct. 3.

Compliance Costs Trickle Down To Borrowers

Regulations limit the amounts that lenders can charge above the numbers quoted in the estimates. “Lenders cannot impose new or higher fees on the final loan unless there is a legitimate reason,” reads a release on the CFPB website.

The costs of regulatory compliance are higher than ever, says Pava Leyrer, chief operating officer at Northern Mortgage Services in Grandville, Mich. Those costs are passed on to borrowers. The uptick isn’t likely to slow down anytime soon; industry leaders have warned that mortgage lending and its associated costs will continue to increase.

Title insurance costs are rising, too. “For the most part, our borrowers, on a purchase, are going to see a pretty hefty increase in title insurance,” Leyrer says. “A couple hundred bucks is a lot on a loan.”

You Still Have Options, So Shop

Many borrowers aren’t aware that they can shop around for competitive closing costs, says Marietta Rodriguez, vice president of national homeownership programs at NeighborWorks America in Washington, D.C.

“They sort of let their lender or their realtor drive how they purchase insurance or their home inspection or any other costs related [to the loan],” she says. “I think most borrowers don’t realize they have choices.”

Certain charges, such as taxes, are fixed: You can’t shop around for a better deal. Becker cautions that you should take a close look at the costs you can control.

“Make sure you’re comparing apples to apples,” he says. “Take into consideration the interest rate and the lender fees out there.”

Don’t be afraid to ask questions to fully understand what you’re paying, Leyrer advises. “Compare the service you get, the reputation, and the costs, along with the rate,” she says, “and then go with what you think will fit your needs the best after doing just a little bit of research.”

Photo: Homes are seen for sale in the northwest area of Portland, Oregon, in this file photo taken March 20, 2014. REUTERS/Steve Dipaola/Files  

Bachmann Hypocrisy Rampant On Home Loans

Just weeks before she called for “breaking up” Fannie Mae and Freddie Mac “so that the encumbered taxpayer no longer backs them,” Minnesota Rep. Michele Bachmann received a $417,000 loan to purchase a 5200 square-foot golf-course home that experts say was definitely backed by one of the two lenders:

Seeing problems with the programs — especially the high costs to taxpayers — hasn’t stopped a concerned public or other members of Congress from taking advantage of the lower interest rates that come due to government backing.

Bachmann’s mortgage was part of a package of debt that she and her husband, Marcus, assumed to buy their home, public records show. They also have other loans, including a home equity line of credit, a business mortgage and another business loan for their Christian counseling clinics, bringing their liabilities to more than $1 million, according to the most recently available public records.

The Bachmanns’ assets, according to her latest financial disclosure statement, range between $862,018 and $2 million.

Bachmann’s campaign is predicated on her having a pristine reputation on the issues (especially among social conservatives) so she can build her policy credibility and tack to the center, at least rhetorically; botches like this — and the recently reported acceptance of Medicaid (welfare!) by her husband’s clinics — threaten her reputation of ideological purity.