Steps to Home Ownership:
You'll feel more confident about your home buying or rental journey when you understand what is required of you and every other person who is involved in the transaction. This guide takes you through it, showing a list that should help you compare what steps you will go through buying real estate.
Step 1. Get Your Finances picture in focus:
Here's some important advice: as soon as you have made the decision that you want to buy a house, one of your first steps should be to make certain that you have a clear picture of your financial situation.
1. Run a Credit Report
2. Analyze your financial situation
3. Develop a budget
4. Keep your spending patterns in check
5. Do an analysis of how this will affect your budget
6. Begin to gather the last 3 year old expense records
7. Take care of past debts
8. Do not incur in any new debt
Step 2. Get Familiar with the Mortgage process:
What a Mortgage Payment Consists of
1) Principal: The repayment of the original amount borrowed on a monthly basis.
2) Interest: The cost of borrowing the principal amount, repaid on a monthly basis.
3) Taxes: Real Estate taxes paid to a local government agency.
4) Insurance: Homeowners insurance on the home. Also any mortgage insurance, which is paid to protect the mortgage company.
Types of Mortgages
A fixed term (for example, 15 or 30 years) as well as a fixed interest rate.
The interest rate and term are fixed at the start of the mortgage. The monthly amount for the payment of principal and interest will not change during the term of the mortgage.
Often referred to as an ARM (Adjustable Rate Mortgage).
The interest rate on your mortgage will be adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest payment will go up or down with these rate changes.
Step 3. Begin the application process:
Get preapproved for a mortgage. This will not only give you a clear idea of how much a lender will approve for you, it will make your homebuying process a great deal easier (and save a lot of time later).
Step 4. Determine Your Wants and Needs
Determine your minimum requirements as well as any desired additional features--your needs and wants. Take note of any items that you don't want in a house.