You can find out by asking yourself some questions:
Do I have a steady source of income (usually a
job)? Have I been employed on a regular basis for the last 2-3 years? Is my
current income reliable?
Do I have a good record of paying my bills?
Do I have few outstanding long-term debts, like car
Do I have money saved for a down payment?
Do I have the ability to pay a mortgage every
month, plus additional costs?
If you can answer "yes" to these questions, you are probably
ready to buy your own home.
2. HOW DO I BEGIN THE PROCESS OF BUYING A HOME?
Start by thinking about your situation. Are you ready to buy a home? How
much can you afford in a monthly mortgage payment? How much space do you need?
What areas of town do you like? After you answer these questions, make a
"To Do" list and start doing casual research. Talk to friends and family,
drive through neighborhoods, and look in the "Homes" section of the
3. HOW DOES PURCHASING A HOME COMPARE WITH RENTING?
The two don't really compare at all. The one advantage of renting is
being generally free of most maintenance responsibilities. But by renting, you
lose the chance to build equity, take advantage of tax benefits, and protect
yourself against rent increases. Also, you may not be free to decorate without
permission and may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you
are building equity. And that's an investment. Owning a home also qualifies you
for tax breaks that assist you in dealing with your new financial
responsibilities- like insurance, real estate taxes, and upkeep- which can be
substantial. But given the freedom, stability, and security of owning your own
home, they are worth it.
4. WHAT SHOULD I LOOK FOR WHEN DECIDING ON A
Select a community that will allow you to best live your daily life.
Many people choose communities based on schools. Do you want access to shopping
and public transportation? Is access to local facilities like libraries and
museums important to you? Or do you prefer the peace and quiet of a rural
community? When you find places that you like, talk to people that live there.
They know the most about the area and will be your future neighbors. More than
anything, you want a neighborhood where you feel comfortable in.
5. HOW CAN I FIND OUT ABOUT COMMUNITY RESOURCES?
Contact the local chamber of commerce for promotional literature or talk
to your real estate agent about welcome kits, maps, and other information. You
may also want to visit the local library. It can be an excellent source for
information on local events and resources, and the librarians will probably be
able to answer many of the questions you have.
6. HOW CAN I FIND OUT HOW MUCH HOMES ARE SELLING FOR IN CERTAIN
COMMUNITIES AND NEIGHBORHOODS?
Your real estate agent can give you a ballpark figure by showing you
comparable listings. If you are working with a real estate professional, they
may have access to comparable sales maintained on a database.
7. WHAT SHOULD I LOOK FOR WHEN WALKING THROUGH A HOME?
In addition to comparing the home to your minimum requirement and wish
lists, use the HUD Home Scorecard and consider the following:
Is there enough room for both the present and the
Are there enough bedrooms and bathrooms?
Is the house structurally sound?
Do the mechanical systems and appliances work?
Is the yard big enough?
Do you like the floor plan?
Will your furniture fit in the space? Is there
enough storage space? (Bring a tape measure to better answer these questions.)
Does anything need to repaired or replaced? Will
the seller repair or replace the items?
Imagine the house in good weather and bad, and in
each season. Will you be happy with it year-round?
Take your time and think carefully about each house you see. Ask your
real estate agent to point out the pros and cons of each home from a
8. WHAT QUESTIONS SHOULD I ASK WHEN LOOKING AT HOMES?
Many of your questions should focus on potential problems and
maintenance issues. Does anything need to be replaced? What things require
ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask
about the house and neighborhood, focusing on quality of life issues. Be sure
the seller's or real estate agent's answers are clear and complete. Ask
questions until you understand all of the information they've given. Making a
list of questions ahead of time will help you organize your thoughts and
arrange all of the information you receive. The HUD Home Scorecard can help you
develop your question list.
9. HOW MANY HOMES SHOULD I CONSIDER BEFORE CHOOSING ONE?
There isn't a set number of houses you should see before you decide.
Visit as many as it takes to find the one you want. On average, homebuyers see
15 houses before choosing one. Just be sure to communicate often with your real
estate agent about everything you're looking for. It will help avoid wasting
10. HOW DO I MAKE AN OFFER?
Your real estate agent will assist you in making an offer, which will
include the following information:
Complete legal description of the property
Amount of earnest money
Down payment and financing details
Proposed move-in date
Price you are offering
Proposed closing date
Length of time the offer is valid
Details of the deal
Remember that a sale commitment depends on negotiating a satisfactory
contract with the seller, not just making an offer.
Other ways to lower insurance costs include insuring your home and
car(s) with the same company, increasing home security, and seeking group
coverage through alumni or business associations. Insurance costs are always
lowered by raising your deductibles, but this exposes you to a higher
out-of-pocket cost if you have to file a claim.
11. WHAT SHOULD I LOOK OUT FOR DURING THE FINAL WALK-THROUGH?
This will likely be the first opportunity to examine the house without
furniture, giving you a clear view of everything. Check the walls and ceilings
carefully, as well as any work the seller agreed to do in response to the
inspection. Any problems discovered previously that you find uncorrected should
be brought up prior to closing. It is the seller's responsibility to fix them.
12. WHAT CAN I EXPECT TO HAPPEN ON CLOSING DAY?
You'll present your paid homeowner's insurance policy or a binder and
receipt showing that the premium has been paid. The closing agent will then
list the money you owe the seller (remainder of down payment, prepaid taxes,
etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if
applicable). The seller will provide proofs of any inspection, warranties, etc.
Once you're sure you understand all the documentation, you'll sign the
mortgage, agreeing that if you don't make payments the lender is entitled to
sell your property and apply the sale price against the amount you owe plus
expenses. You'll also sign a mortgage note, promising to repay the loan. The
seller will give you the title to the house in the form of a signed deed.
You'll pay the lender's agent all closing costs and, in turn, he or she
will provide you with a settlement statement of all the items for which you
have paid. The deed and mortgage will then be recorded in the state Registry of
Deeds, and you will be a homeowner.
13. WHAT DO I GET AT CLOSING?
Settlement Statement, HUD-1 Form (itemizes services provided and the
fees charged; it is filled out by the closing agent and must be given to you at
or before closing)
Mortgage or Deed of Trust
Binding Sales Contract (prepared by the seller;
your lawyer should review it)