Home Buying in Okemos>Question Details

Rachel, Home Buyer in Okemos, MI

We'd like to buy a home in fall or winter of 2009, what should we do to prepare?

Asked by Rachel, Okemos, MI Mon Aug 25, 2008

We've just moved from California to the East Lansing area of Michigan. We're renting for a year but the lease is up in August of 2009. We'd like to buy in fall of 2009. How can we prepare to do so?

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Rachel,

Here is a list developed by the National Association of Realtors(R). (my comments follow each point)

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income. ** In our current Lenders Market, this amount may actually be a little high.

2. Develop your home wish list. Then, prioritize the features on your list. ** On the website below is a sample form with over 60 items a real estate professional can use to narrow your search. I do not recommend narrowing the search too much.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety. ** Sadly, real estate professionals cannot "steer" consumers to the best neighborhoods and schools. That search must be done on your own or with the assistance of friends and family.

4. Start saving.Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price. ** Depending upon the type and price range of the loan you need there is some leeway in the 20 percent value. There are still a couple of low down payment loans available depending upon where you want to live and your household income.

5. Get your credit in order.Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments. ** Once every 12 months you can get a free copy of your credit report from http://annualcreditreport.com This is from all three credit recording agencies. Credit score and a credit score simulator are available on http://myfico.com

6. Determine your mortgage qualifications.How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you. ** The HUD website contains some options. If you do not qualify for a loan they also offer Housing Counseling for a fee. http://www.hud.gov/local/index.cfm?state=mi look in the right hand column.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements. ** There is at least one lender that still does free loan pre-approval and is an affiliated business of my broker (full disclosure) http://mumloans.com

8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal. ** From experience, make sure you fill out the paperwork correctly on this so the 1099 you receive has the correct code.

9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable. ** The State of Michigan has a property tax estimator available at http://www.michigan.gov/treasury/0%2C1607%2C7-121--82403--%2… You will almost always pay more than the taxes indicated on a listing.

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process. ** I agree with Lisa, interview at least 3 agents and pick one as your Buyer's Agent. A sample of this form is available on the website below. Please keep in mind that you should not have to give up any personal information to view homes. A list of all Multiple Listing Services as well as a Realtor(R) search is available at http://mirealtors.com select Consumers from the top menu.

If you have any other questions feel free to contact a Trulia member or ask another question. I wish you luck.
1 vote Thank Flag Link Mon Aug 25, 2008
Rachel,
I think the other people provided some great advice but one precaution I would take BEFORE you let anyone run your credit (including you) is to opt out of the credit trigger lists. If you don’t opt out of these lists then, unbeknownst to you (and even most people in the industry), the next morning the three national credit reporting agencies compile a “trigger list.” This list is comprised of consumers who, like you, had their credit pulled in the previous 24 hours while shopping for a mortgage. A similar list is compiled of people who had their credit checked as part of obtaining a new credit card. These trigger lists are then purchased by lenders and firms who sell leads to credit card and mortgage companies based upon the type of firm that ran your credit and you will start to receive phone calls and get even more junk mail than you already get.

If you do not want solicitations, junk mail and phone calls, you need to opt out of having your name reported on these pre-screened trigger lists. You can do this electronically for five years or sign up permanently by requesting removal from these lists in writing. To accomplish this, as well as eliminate most of the junk mail that comes from these target lists (which are full of your personal information), call 1-800-5-OPTOUT (1-888-567-8688) or log on to http://www.optoutprescreen.com. By getting off of these lists you will have less of your information floating out there, which in turn will limit your chances of having your identity stolen.

If you decide to opt out from these trigger lists you will need to provide your name, address, home phone number and social security number. This process is completely confidential and if you use the website it is a safe and encrypted site provided by the national consumer reporting agencies as required by Federal law.

Additional resources about the opt-out process can be found at The Federal Trade Commission’s Prescreening Information Pamphlet at the following URL:
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.shtm

If you would like to read up on the 8 Mistakes to Avoid When Buying a Home please click on this link: http://davemuti.wordpress.com/2008/07/09/financial-mistakes-…

I hope that you find this answer helpful and I wish you much success in your endeavor.
Sincerely,
Dave Muti
1 vote Thank Flag Link Mon Aug 25, 2008
Gary, Cindy, Bill & Lisa all have great guidelines for you to follow, so I am not going to repeat them. One suggestion, I might make is that with prices being very attractive right now, you may want to consider asking the seller to help buy out your lease to break it early. (Depending on the costs involved) You are also welcome to visit my site for many buyer tips located on the tabs at the top of my home page. The entire inventory is also available for you to shop the greater Lansing area on the first page by clicking the search over 6000 listings link. feel free to email is you have any additional questions. Thanks, Mike
"Expect the Best" Mike
Web Reference: http://mikebowler.com
1 vote Thank Flag Link Mon Aug 25, 2008
It's wonderful that you are being proactive and preparing yourself for your first home purchase. I recommend the following:
-Check your credit score and work to get it as high as possible before next summer. A higher score means a lower interest rate on your mortgage.
-Pay off as much debt as possible. To qualify for a mortgage, your debt can only be a certain percent of your income.
A reputable loan officer can help you with both of these.
-Save a search online to start receiving emails notices of new properties in your area. This will educate you on the market.
-Ask family/friends/co-workers for recommendations for a great Realtor to get to know you during this prep time. That way, when you are ready, a professional already knows what you like and dislike, and you can narrow your search!
Good luck!
1 vote Thank Flag Link Mon Aug 25, 2008
Rachel,

Knowledge is power......start collecting as much information as you can, learn about the buying and selling process, build up your credit rating, get pre-approved, study the market in your target area, find an agent that understands and accepts your long range goals that is willing to support your interests.

It's refreshing to hear from someone that is looking to he future and planning at the same time. Congratulations and good luck....

the "Eckler Team"
1 vote Thank Flag Link Mon Aug 25, 2008
Hi Rachel ... welcome to Michigan!

You're pretty far ahead of the game which is great. I would sit down with 2-3 Realtors in the area you're interested in living and see which one you click with best. From there, they will have several lender referrals so you can see how much home you can comfortably afford.

Once you get a good Realtor and lender and you know how much you want to spend start driving around neighborhoods and see which ones you like best. Maybe give yourself a god 3-6 months before you actually need to move to start looking with your Realtor. There are a lot of short sales out there right now and they can be time comsuming, so be prepared for that for sure.

If you need any referrals either for Realtors in your area or lenders, don't hesitate to visit my website and shoot me an email.

Best of luck,
Lisa Bender
Keller Williams Realty
lisabender@kw.com
1 vote Thank Flag Link Mon Aug 25, 2008
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