"I had the guidance of a wonderful realtor, it was a buyer's market, I was open minded and I acted quickly. "
How I did it: About a year ago, I decided I really wanted to own a home. So, I got a copy of my credit report (to which every American is entitled FOR FREE annually in accordance with the government FACT-ACT---DO NOT use any of those gimmick companies that make you pay for your credit report! It's a waste of money! If you want more details about that stuff, please feel free to email me). anyways, back to the house, once I saw my credit report, I had to make some calls about things that were reported incorrectly. That raised my credit score a little.
Once I had an idea of how my score rated, I read about what is required to buy a home in most scenarios. My biggest hurdle was my debt to income ratio. I made a decent amount of money, but I had a high car payment, credit card debt, etc... I really made it a priority to pay down my credit card debt by paying OFF all cards that I could... starting with the cards having the highest interest rates first.
Once I payed one off, since I had already budgeted for that payment amount to come out of my money each paycheck or month, instead of pocketing that money, I applied that to another card, thus doubling up on payments.
Before I knew it, I had paid off all but one of my credit cards. Since I had a good credit rating and now relatively low debt, I called my remaining credit card company and asked for a limit increase. The important factor in credit scoring is to make sure your debt is below 50% of your available credit. Since I couldnt afford to pay down anymore, I raised the limit. My score jumped to 715!
Once my minimum payment on my last credit card was less than $100, I started putting $100 on my credit card each paycheck, and $100 in my savings account each paycheck.
By this time, about 6 months had passed.
I went online through REIN (real estate information network) to look up properties just to see what kind of pricerange homes in my city are listing.
I ended up having to register at one site in order to view properties... when I registerred, a realtor actually contacted me. She was FANTASTIC! I was very honest with her about what I wanted, what I could afford in a monthly payment, things I was willing to compromise and things about which I could NOT bend.
She was very helpful, caring, patient and hard working during our search.
She put me in contact with a mortgage lender. After speaking to him, he crunched some numbers and told me what it would take to buy a home, and what my options were.
For me, the best deal ended up being through the government program FHA. The product I got is known as an FHA PLUS loan. This loan is a fixed rate 30 year mortgage on which no down payment is required because you actually finance that on a second "mini-mortgage." This was great news for me because I had been working so hard to pay down my credit card debt that I had VERY LITTLE liquid cash in savings that I could use as a down payment.
There are qualifications you must meet in order to get an FHA Plus loan, so if you're interested go to FHA.GOV and read about buying a home, the different products and what it takes.
All in all, I attribute a lot of my success in this venture to being committed to buying, being patient and having a wonderful realtor to take me through every step of the process!
Lessons & tips:
- Figure out a realistic goal for your first house. Understand that your first home may not be a mansion, but that it doesnt have to be a dump either. You can make ANY house a home, be open minded and remember this is NOT the only home you'll ever own.
- Be patient!! The homebuying process is known for being complicated, complex and for things falling through at the last minute. If you find a home you like and something falls through, accept that it just wasnt meant to be--something else is waiting for you! Have faith.
- Do your homework! Know the neighborhood, don't be afraid to ask about the neighborhood from people who LIVE there, not what people have heard, etc... ask the mailman, ask the electric company... they go into those places all the time and see everyday life. Understand that the people make a neighborhood bad, not the area.
- Consult a realtor, but DON'T sign a commitment with a realtor until you've found someone with whom you're comfortable. If you talk to a realtor and you feel like they arent listening to you, you can get another realtor. Unless you sign a contract with that realtor, you're not bound to him/her (at least, not in my state! Look up the National Association of Realtors to get more details about governance in your own state).
- Look for potential in houses. A lot of houses that first time buyers seek out are not fabulous places, but you can make them great with a little bit of work. You can learn how to do anything thanks to the internet!
Resources: - FHA.GOV
- National Association of Realtors
- Do it yourself!
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Sep 15, 2008, 02:35PM PDT
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