Question by Amber A: What are the steps we need to take to get pre-approved and buy a home for the first time?
My husband and I live in a two bedroom apartment with our 4 year old daughter and 2 year old son. We have lived here for 4 years and need to buy a home this year. We really don’t know where to get started and it’s a little intimidating! Any suggestions or experiences you have had would be helpful and most appreciated 🙂 Thank you!
Best answer:
Answer by Big Deal Maker
Go to your nearest credit union that you belong to or even if you do not at least that would be a good place to start.
Then try a FHA home loan.
And please have a real estate attorney go over all of your paper work including the loan. It will be well worth the few thousand you spend with them.
Know better? Leave your own answer in the comments!
Make sure your credit history is great, FICO score of 750 is needed.
Sit down and honestly figure out how much you can afford to pay each month toward mortgage, property tax, homeowner insurance, heat, sewer, water, trash pick up and home maintenance. This should not be more than 40% of your take home pay.
You will need 20% cash downpayment. So for a 200k house you need 40k plus another 7 to 10k for closing costs.
Check with your local bank and internet to see what the best interest rates are for a 30 yr. fixed mortgage.
You may want to check the library for a book on buying your first home and learn what all the terms mean.
Start by finding a mortgage broker or contacting some of the local banks to check on the best interest rates. When you have identified the best terms, ask the mortgage loan officer how to get pre-approved – he will walk you through the process.
While you talking to him/her, ask what the bank will expect for a down payment (figure 10% unless you can go FHA).
Now, once you have been pre-approved (remember, this is not a final approval – it just means that barring anything coming forward, you have a good chance of passing the underwriters), this will give you your top price. Run the number through a mortgage calculator to check the P&I payments. This is what you expect to pay monthly for Principal and Interest only. Add in another few hundred for taxes and insurance and that would be the payment. If that payment seems too high, then you will have to look for a less expensive house. Keep playing with the mortgage calculator until you get a payment you can handle – that is your price.
Now go look for a house in that price range. Find a good agent (ask around). Tell them your price range – don’t let them try to show you more expensive houses. Remember it’s you rmoney and your budget – the agent won’t be there to help you make payments.
You have nothing to worry about, just look for a good bank or your preferred lender or mortgage broker. Let them know you are interested in being qualified for a loan. Meet with them if you have no prior experience in home buying, that way you will learn the important facts about getting a loan. If you are already working with a Realtor (recommended), they will definitely have suggestions as for the people who could assist you in getting that loan. One last tip, you should have a number in your head to avoid surprises later (amount to spend every month in your payments), since your monthly payment will not only be for the mortgage itself. Look out for the kind of loan you get!!