To buy a home, there are three points which are
1. Decide to buy:
You want your own place.You want to paint your
walls the color you want and plant your own garden.
As you think about the reasons to own a home, also think
about the increased responsibility. Almost
every home will demand time, energy and money to maintain -no
landlord to fix the leaky faucet.
Financial reasons for buying:
• Reducing income taxes. 1 with a mortgage, you may be
able to deduct the interest you're paying -
and property taxes -from your taxable income. In some cases,
owning is less expensive than renting.
• Buying for profit. While there are no guarantees that your
home will appreciate in value, it's true that real estate can
be a good investment over the long haul.
• Buying euity. As you pay down a mortgage, you build
euity, or value, in your home. You can use that value to secure
a home equity loan or line of credit.
Timing your purchase:
The mood of the real estate market and the direction interest
rates are moving may encourage you to jump in or cause you to
put off buying right away.
• Buying when the real estate market is hot generally means
prices will be higher.
• you'll face increased competition from other buyers who may
be willing to offer more than the asking price.
• You may be vulnerable to future price downwings, particularly
if you don't plan to stay in your home for more than a few years.
2. Review Your Credit:
Credit involves the borrowing of funds with the intent
to repay thelender at a later date, such as credit cards, car
loanns and student loans.
what is a credit report:
when you prequalify or apply for a loan, the lender requests
a credit report from the credit bureau. The credit bureau collects
and organizes information about people who have credit. This
• Your Name
• Length of Employment
• previous credit history, including account types, balances
remaining, payment status, collection information and inquiries.
Lack of credit history:
Most traditional mortgage loans generally require some kind
of established credit history. Thesae options look at other
ways to establish credit worthines, such as timely payments
of rent and utility bills.
What you should know about credit reports:
Credit reports document your financial behavior over the
past seven years - how much credit you have, how long you've
had it and whether you pay your bills on time, among other things.
Knowing what information is your reort can help you identify
any problem areas and plan what steps you might take to correct
Three credit report agencies - Equifax, TransUnion and Experian
- maintain credit reports. Lenders buy credit reports to help
them decide whether to offer you a prequalification.
Your credit report also carries your credit score, a numeric
ranking between 300 and 850 that many predict.
whether you'll repay a loan. It's calculated using five
• Payment history
• Amount owed
• Length of credit history
• new credit
• Types of credit in use
In addition to telling lenders your creditworthiness, your credit
score can alsoinfluence the interest rate you pay. In many cases
the higher your score, the lower your interest rate.
3. Afford a Home:
There are three important questions you should ask yourself:
• Can i afford to buy?
• Do i have enough for a down payment?
• Can i get a loan?
Can i afford to buy:
Part of answering this question involves figuring out how much
you're able to pay every month for a mortgage, including pricipal,
interest, property taxes and property insurances( also known
In general, lenders require that monthly housing payment be
no more than 28 to 33 percent of your gross monthly income.
In addition, your total monthly debt payments, including your
mortgage costs, car loans, student loans, credit cards and other
loans, generally should not exceed 36 percent of your gross
Calculator: how much will my monthly mortgage
calculator: how much can i afford?
The following also play an important role:
• Type of loan you choose
• Interest rate you pay
• Amount of down payment you make
A good way to verify what're able to afford is to get prequalified
for a mortgage.Many lenders let you prequalify online.
Calculator: how much can i borrow?
view : All about Mortgages
Do i have enough for a down payment?
The down payment is the cash you put down to buy a home. It
demonstrates your financial commitment to the purchase.
In general most lenders require that you make a down payment
equal to 50 to 20 percent of the value of home.
Making less than a 20 percent down payment will probably require
you to pay for private mortgage insurance (PMI).
calculator: how much sholud I put down for
a new home?
Saving for a down payment :
To save your down payment, create a budget that includes steering
a portion of your income to savings or investments.
If you plan to buy with in 5 years, consider:
• Federally insured savings accounts
• Federally insured certificates of deposit