I have put together 5 key points for home buyers to begin to do to start the year off right to ensure their ability to be a homeowner in 2012.
Like many homebuyers, you sat on the sidelines for the past few years -- watching the real estate market go from boom to bust -- and now you're just about ready to jump in.
What renter wouldn't be at least toying with the idea of homeownership, with interest rates well below 5 percent andhome prices having dropped more than 20 percent in many areas of the country?
But just because conditions have tipped in favor of homebuyers doesn't mean you should run out and snatch up the first "great deal" you come across. Instead, if your goal is to become a homeowner in 2011, position yourself for long-term success by making these five New Year's Resolutions forÂ renters who are aspiring homeowners:
Resolution #1: I will come up with a meaningful down payment for the house I want to buy.
You already know that the days of no-money-down loans are largely gone. These days, lenders want to see that you have some skin in the game. That means you should be prepared to come to the table with some cash of your own.
You don't necessarily have to come up with a 20 percent down payment. But a 5 percent or 10
percent down payment for a conventional mortgage would be nice. Even with a government-backed loan, such as an FHA loan, you'll need to have at least a 3.5 percent down payment. The good news is that, with all your scrimping and saving, you'll walk in the house with equity in the property.
Resolution #2: I will get my credit in the best possible shape before applying for a mortgage.
No matter where you go to get a loan, somebody's going to check your credit rating. Ideally, you want your FICO credit score to be 700 or higher. That puts you in the running to get the best possible loan terms and interest rates. Some banks are even demanding FICO scores of 720 or 740 for the best rates. Whatever the case, you need to know where your credit stands.
Haven't checked your credit reports recently? That's not surprising. The National Foundation for Credit Counseling says that two-thirds of all adults in America haven't taken a peek at their credit reports in the past year; even fewer have checked their credit scores. You can get your Equifax, Experian and TransUnion credit reports free of charge at AnnualCreditReport.com. Don't know your FICO score either? Read this article on how to get your FICO credit score free.
Resolution #3: I will become a record-keeping guru - at least for as long as it takes to document my loan.
Documenting your application is the name of the game to get a mortgage in this credit environment, in which lenders are skittish about getting burned by borrowers who don't repay their debts. So be prepared to fully document everything: your income, your assets, your liabilities, and even aberrations -- like that mysterious (at least to your lender) $1,000 holiday gift from your rich uncle that was deposited into your checking account this month.
Resolution #4: I will consult reputable professionals for help.
Buying your first home isn't a task best left to novices to navigate alone.Â you will likely fare much better in theÂ home-buying process if you let the pros help you in a variety of areas.
For instance, a trusted real estate broker can get you into properties in your desired area, show you market comps for homes available for sale, and draw up an offer to buy to present to a home seller. Likewise, a home inspector can point out hidden flaws and alert you to structural or environmental defects you might not see in that home, condo or townhouse you've fallen in love with.
Resolution #5: I will take a homeowner education course to better prepare myself for the rights and responsibilities that go along with homeownership.
Every state in the country, as well as most cities and counties, offer some kind of first-time homebuyer education program. Many of these courses take just a few hours, but you'll be greatly enriched by them. They teach you the ins and outs of mortgages. They tell you how to spot and avoid predatory lending. And they counsel you on what to do if you run into financial trouble down the road, after you've bought a home.
Not only will you learn about what it takes to become - and remain - a successful homeowner over the long haul, but you may also qualify to get government-sponsored financial assistance just for taking the course. This aid is free money, often in the thousands of dollars, can be used for a down-payment or towards your closing costs.
So if you're currently renting, any of these New Year's resolutions will make your 2011 a great year, especially when you finally do move into the house of your dreams.
Please feel free to call Gary Giffin or reply with any questions or concerns. Â I look forward to working with you in 2012.Website contact for all your Real Estate Needs: WWW.SanDiegoHomeSold.com