10 Ways to Prepare for Home Ownership

Posted Monday, Sep. 16, 2013  comments  Print Reprints
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1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize.

3. Compile a list of three or four neighborhoods in the area where you’d like to live. Take into account criteria such as schools, recreational facilities, area expansion plans and safety.

4. Start saving money to qualify for a mortgage and cover your down payment -- ideally 20 percent of the purchase price. Don’t forget to include taxes, legal fees, transfer fees and other closing costs, which average between 2 percent and 7 percent of the home price.

5. Get 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.

6. Determine how large of mortgage do you qualify for and what loan options -- such as 30-year or 15-year fixed or adjustable-rate mortgages -- are best for you.

7. Get pre-approved. Organize all the documentation a lender may need for this, including 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.

8. Weigh other sources of help with a down payment. Check for special assistance programs like those for first-time home buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your first home without paying a penalty for early withdrawal.

9. Calculate the costs of home ownership, including taxes, insurance, maintenance, utilities and association fees.

10. Contact an experienced real estate agent to help guide guide you through the process.

Source: National Association of Realtors

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