The First 5 Steps in the Home Purchase Process1/10/2011 Many first time home buyers are unaware of the first steps in the home purchase process. This is nothing to worry about. There are many lenders and real estate agents who are more than willing to help you understand the basics of buying and owning a home. You’ll be most successful if you follow the steps outlined below. 1. Understand the terminology used in the industry. You need to understand the most common terms before you contact a seller or agent to purchase a home. It’s even more essential that you understand the terms of your mortgage before you sign the dotted line. Check out our article series on mortgage terminology and definitions, part one, part two, and part three. 2. Know your financial goals and your financial abilities. If you’re not financially ready for a mortgage, don’t get one. Simple as that. There are alternative mortgage options available, such as the FHA mortgage program, that you should consider. If you are financially ready to take on the costs of home ownership, take the time to establish a set of goals. How long do you plan to own the home? Will you need to make repairs? Do you plan to retire soon? 3. Find out your credit score. This is a critical step. If you skip this and let your lender find out for you, you risk getting denied on your loan. If your credit score needs repairs, take the time to fix it up before you try to purchase a home. The money you’ll save in the long run in reduced interest is worth it. 4. Get your paperwork together. You’ll need to prove reasonable income and steady employment. Gather pay stubs and W2s and any other documents your lender requests as swiftly as possible. 5. Understand the differences between the loan types available to you. There are many different mortgage loan options available in the marketplace. You may qualify for some loans but not others, and different loan types offer different benefits and drawbacks. Find out what your options are and know the difference before you try to purchase your home. Want additional information on the home purchase process for first time home buyers? Refer to our first time home buyer checklist for a detailed outlined of all the steps involved. |
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