Good. Use that time to educate yourself. Take a look at “Rich Dad, Poor Dad” and “The Cashflow Quadrant” which are good personal finance books that normal people can read and understand.

First, educate yourself.

Second, write out your Financial Statement which is both your Income Statement and your Balance Sheet. You can stop by your local library or bookstore to see what those look like in the books I recommended.

If you did step 1 and 2 then you should know how to read your Financial Statement.

Three, from step two you should know what you buying power is (how much cash you have available and how much you can afford to spend per month). You may not want to spend all your cash or wind up with a house payment that will put you in a stranglehold. Make sure you will have breathing room or don’t do it. Now you can start looking at the market and seeing what interest rates are like as well as condo/home prices. You may want to start going through the motions with a mortgage company such as your bank or other reputable lender. Being pre-approved or pre-qualified makes things go a lot quicker when you’re ready to close the deal but don’t require any commitment to buy anything. Your just basically going through 30 days of paperwork to be ahead of the game when the opportunity comes around. It also helps when you talk to owners or realtors that you’re already pre-approved/qualified.

Will you be living along or with a partner? If alone, would you be willing to have a roommate to help cover costs (you should be able to live there without a roommate, but it certainly is nice to have someone else paying your bills or a portion of them…). If so you may want to look at something with at least 2 bathrooms, etc…

Try to go a conventional 30 year mortgage and not an ARM or other deal which may end up biting you in the end.

Not sure where you live, but where I am, prices are outrageous and the primate rate is high making it a lousy time to buy. Maybe the prices in your area aren’t too bad.

Hi!

It really depends on what kind of payment and terms you are interested in.

To get approved for a loan not missing any payments on your current bills is extremely important. Anything over 30 days will be a negative toward you credit score. This makes-up about 35% of your credit score.

Second in importance is, your bills/debt cannot be over a certain percentage over what you make a year. To get the best terms on a loan your FICO score needs to be over 600. The higher your credit score the lower your interest rate will be (Highest FICO is 850). There are 3 types of loans in general terms Conventional (private banks) FHA and VA (government loans). VA can only be used by military or ex-military and it’s 0% down. FHA is what used to be know as a first time buyer loan because you only had to put 3% as a down payment and your closing costs were relatively low). However, Conventional loans came a long way offering from 0% down to as much as you can or want to put down. They have grown stricter in terms of FICO scores because there have been too many defaulted loans in the past 2 years and they only offer 0% down to A and B paper (good credit). If you put less than 20% down on a loan you are charged what is called PMI (private mortgage insurance). The only way to get around this is by taking out 2 loans. These can be a combination of first mortgage (bulk of payment) and second mortgage (left over amount minus your down payment). Example: An 80-15-5 means, first loan 80%, second loan 15% with 5% down. It can also be a 80-10-10, or an 80-20 which means you are not putting a down payment. The second loans interest rate is ALWAYS higher than the first loan. Interest rate at this time ranges from 6%-7.5% depending on your credit. Your second loan can be all the way up to 10-12% but it will save you money as they wont charge you for private insurance. Also be aware of prepayment penalties (if you pay your loan before a certain time frame you could be penalized) or ARMs (Adjustable mortgage rates). This means your interest can change after a set period of time. Another important thing to know is you can buy your interest down. This is called buying points and the bank/mortgage company will tell you how much to get it to where you want.

RECAP:

1. Know what your credit score is.

2.If your score is low and the terms are not good or if you can’t get approved for a loan have a mortgage broker guide you and tell you what would be the easiest quickest way to “clean up” your credit so you can purchase a home.

3. If your credit is good or the terms are right, speak to your mortgage broker about options. Have him/her run a GOOD FAITH ESTIMATE for you so you can know and understand what to expect regarding payment, closing costs and purchase price. Give them an idea of what you would like as a monthly payment so they can give you that estimate.
3. Have them run different scenarios so you can see what your best option is (Conventional, FHA, 0% down, 5% down etc.) once you realize what you want your payment to be save for the down payment and closing costs. Your payment can include taxes and insurance so that at the end of the year you don’t have to pay a large amount because you have been paying for that monthly.

4. Once you have the terms you are looking for with a payment you can afford, this will be the time to buy a house.

• if you are short on cash on hand you can add closing costs to the amount of the loan or ask the seller to help with these costs. Remember the seller has their own closing costs and depending on the market (buyers or sellers market) the seller may not be inclined to pay for part of yours.

I Hope I have been of help and not made it too confusing. Let me know if you have any other questions.

• This applies to USA, it may be different in other countries.

Brenda

My answer isn’t as elaborate as the above, but I can tell you that first of all no one can tell you when you’re ready to buy a house. It’s a huge undertaking like getting married that no one else can decide for you. Second, try to have some downpayment. While it is possible to get 100% financing (we did) it’s not always the best option if you’re in a position to put money down. The more money you put down the more and faster your equity will grow. If we had had a choice we would have waited, but we’ve been married for five years and moved to an area where the real estate prices are outrageous and just keep going up. It can depend on your job situation. My husband is about to get a large raise and won’t get another one for about two years so it made sense for us to go ahead and take the plunge and sacrifice for the time being. If we had waited until next year to buy there’s no telling how much we would have paid for a house. Other things to consider is the extra expenses that you may not have had before. Yard equipment such as a lawn mower, weed-eater, and other assorted items can add up quickly. Also other maintanence items for inside such as air filters, and other general items are needed. And of course organizational items as well as furniture and window treatments can get expensive, but if you shop smart like I have then you should be OK. eBay is a great place to purchase even new items at great prices. One more thing: utilities will increase. The more square footage, the higher the bill. However, things like ceiling fans and such can help keep costs down. And as much as I love natural light, it’s cheaper to use low wattage light bulbs (or even no lamp during the day) and keep the curtains drawn. If I do open the blinds, it’s later in the day when the sun has gone down a bit. This keeps us from living in a cave 24/7 and going insane. LOL I think having some common sense and an idea of your financial standing are key ingrdients to readying yourself for the purchase of a home. Do your research and shop around for a mortgage. Don’t just go with the first one you contact. Fees and rates do differ (though I don’t really know why) and you want to make sure you’re getting the best deal you can. One last thing, look into possible first-time home programs that are available in many states. These can include down-payment assistance or lower rate mortgages. But again, research and find the right mortgage and program for you. And finally, as far as mortgages, go with a traditional 30-year fixed as opposed to an ARM. People can get and have gotten into real trouble with those. They may look attractive at first glance, but when you really dig and look at the terms, you will find that they are the worst idea ever. Most of all, take your time and relax. Buying a house is stressful enough so if you need to take a break for a few days or even a week. And there are several online resources for finding the home best suited to you. Good luck and enjoy the search. Stressful, but can be so much fun! =)

Save up the biggest down payment you can afford. The more you put down, the less you end up paying in interest and the quicker your new house starts building value for you.

You are going to need money for paint, furniture, repairs, and other little things once you buy it. There is no point buying a house if you have no money left live in it. Also, don’t let your house stretch you so thin you have nothing left for car repairs (or a car payment) or other unexpected expenses.

Ditto with what eib 190 said.

Make sure you plan on living there for a while,have it be near your job, and that you are going to buy it along with your significant other.

1. Make sure your credit is as good as you can get it, this will give you access to a better interest rate and less hassle when working with the mortgage company.

2. Research the different mortgage companies/banks to see who’s offering the best deal.

3. Make a good down payment, it really makes a difference.

Start planning now, it’s never too early.

You have a lot of detailed advice here. We all have our own experiences, and those inform what we have to offer.

What I see right now is a quintessential buyer’s market. Housing prices have a natural floor, unlike stock prices. What I mean by that is that it is very difficult to sell a house for less than what is owed the bank. Yeah, the bank will agree to a short sale, meaning will take less than the loan balance, sometimes, but not very much less. 1 – 1 1/2 % is what I have seen.

Bearing in my that in the last three to five years almost everyone refinanced their house to take advantage of low interest rates, and that property values were soaring, and the picture that will emerge is that mortgage balances tend to be high.

This keeps prices up there.

So why is it a buyer’s market? You have choice like crazy. When the market was hot, you could try to buy a certain house, but the advertised price was not going to be the selling price, so you were forced to guess and overbid, and still lose out, as we did, three times. That set us back months in buying, with prices going up.

Prices are not going up now. But due to the loan balances, they have nowhere down to go. So they are resting.

If you can get a loan now, based on the cash reserves you have, then putting off buying is risky. Interest rates are also resting, but they will inevitably go up. It is the interest rate that determines your payment. You can pay more for a 300,000 loan with medium high interest than a 500,000 loan with low interest—every month. Use the interest mortgage calculator on realtor.com to see this, and remember that your taxes and insurance are extra.

And that last bit of advice is the big one. If you see those fluctuations—and figure it anywhere from 5.85 % which you may get somewhere now, and 8.5 % which is where rates could be in two years, and you’ll see what I mean. So even if prices slip a bit, the interest rates going up is more important.

Good luck.

Good on you for buying your Mom a house!

Involve your mom in this decision. Is she comfortable with the idea? Where does she want to live? Would she prefer a condo or a house? Does she want a home with a garden, a balcony, no garden, an older building, a newer building, what style kitchen, how many bedrooms and so forth.

Consider things like door widths, counter heights, ease of bathtub and toilet use, and other accessibility tools should she need a walker or wheel chair.

A down payment of 20% does let you avoid PMI fees. If you want or need a smaller down payment, PMI fees will not be assessed after your capital investment reaches 20% through your payments.

A high credit rating will lower the interest rate of your loan. If there is incorrect negative information, get a letter from the company stating that the information listed on the credit report in their name is wrong. For example, if Sears says you were 90 days late with a payment and you don’t think you were, call Sears credit department. If they agree, they can remove the information. Ask them to send you an official letter that you can send to the credit reporting companies.

If your credit rating is genuinely low, make payments on time for about a year, make sure you do not go over limit on any account, and pay down your account balances. Some lenders advise closing paid off accounts and some advise keeping them open, so talk to a lender broker about that.

Talk to a mortgage broker soon to get more of an idea of the current market and rates, and what you need to do to get the best rates in your area.

Identify the lenders with lower rates in your area, but also the stability of the mortgage company, including FHA and VA loans if you qualify. Check your state for any special buyers rebates or programs. If you find a lender you really want to work with, talk with a representative about what you need, and what you need to do to get the best mortgage for you.

Look at mortgage types – variable rate, fixed rate, 15 year, and 30 year are common. Look at the amortization table to see how long it will take you to pay off the loan, and what the total payoff will be. Consider how long you plan on keeping the property. Make sure the payments match your budget, including property taxes and homeowners insurance. If you can make extra or add some to your regular payment, your the amount you pay in interest will decrease and your capital investment will increase faster.

If you have saved enough for a down payment and your credit is good to very good, look at some houses and on realtor.com to decide what area, price range, and home style you and your mom are interested in. Find a buyer’s agent you want to work with, who will follow your purchase goals.

When you think there is a strong buyer’s market, get preapproved for a loan a little higher than your price range and start looking! You will be a very prepared buyer and should be able to get a good deal on a home fairly quickly.

The financial… Well… That was important, for sure. I waited 10 years to buy mine. (I was putting money aside, it took me 10 years to get 25 000$)

I never been more happy in my life. I love my house, I never felt good like this in any other place. It increases the quality of a life!

Your life change.

I barely go out anymore, I stay in, thats the place where I want to be.

Its the best investment you’ll ever do.

Be ready to work hard, though.

You’ll spend all your money on your house, but you’ll make so much profit when you’ll sell it, its worth every penny.

Have fun, enjoy your house, thats the most important.

Make sure that your monthly payment (inluding property taxes) is something you will be very comfortable making. Banks are quick to lend out the maximum and if you are not careful, you will end up overextending yourself for a home you really cannot afford. We started out viewing homes that cost the maximum amount that the bank would lend us. This was a mistake because we began to fall in love with homes that we really could not comfortably afford. In the end we ended up buying something $50,000 less than the bank would lend. We are glad we did because we have enough room to pay for incidentals. Check in into the school district’s reputation. Even if you do not have children, the school quality will affect resale.

At this point in our global economic community’s history, I would be very cautious yet still optimistic about approaching the planning for buying a house.

First, you have all the time in the world. Good. Think of buying a house like entering a mine field. You have the rest of your life to get yourself out to safety. Since the housing market is so … well, uncertain, I would study it very hard, while investing money elsewhere to save for that very big step.

Secondly, don’t limit yourself to just your own community or region. We are a global community, right? Consider investing in other places where your dollars, pounds, or euros, or whatever currency you use, can get greater purchasing power.

Third, learn as much as you can about inspecting houses, learning about titles, deeds, liens, and so forth. Learn enough that at least you can “manage” your specialists and experts, such as the housing inspectors, the realtors, and so forth. You don’t want to be totally at the mercy of those who have the knowledg4e or the power.

Fourth, research and network to find trusted brokers and contractors. Use the Better Business Bureau, your local church and civic organizations. Don’t be shy about asking “Can you trust” so and so?

Get a listing of your expenses to the last penny.. if you’re planning to take emi’s keep emi’s below 40% of your monthly income (avoid the 60% trap) free yourself of any other debt that you may have like credit cards or any other personal loans, before you even think about getting into a house purchase.

Buy a place where you would love to live in and do not get into a speculative investment on property.

Factor in costs of rennovation / interiors before getting into the commitment.

Factor in other statutory costs imposed by the authorities / gov / municipal corporations etc. over and above the cost of the house.

Plan ahead to try and pay it off in ten years time.

I know I am coming into this conversation late, but I had a comment about PMI. Clearly, if you have time to save for a 20% down payment, that’s best, but we only had a 5% down payment and wanted to stop throwing away rent money. The mortgage company did this trick where they gave us TWO loans-one was the “down payment” loan that helped us avoid PMI, which, after running the scenarios, worked out better for us. The “down payment” loan is the one we are paying off early.