First-Time Buyer Steps To Becoming a Home Owner

So, you're ready to buy a house. I am developing this as a first time buyer's guide- but most of the principals apply to anyone in the market to purchase a home. I cannot imagine this going off in less than 10 parts- I could probably do 5, but they'd be long and you'd get bored and read someone else's less-boring blog. Without further ado:

First-Time Buyer Steps To Becoming a Home Owner Part 1

Get Pre-approved:

When one decides to purchase a home it's an awfully exciting time. It's VERY easy to jump right in and start looking at homes. It is, however, a poor decision. The first step one should take is acquiring a pre-qualification or pre-approval. WHY? Simple. You want to know where you stand as far as buying power. If you want a $200,000 house but your buying power really limits you to under $170,000 you need to know. From there you can either purchase what you can afford or wait and save till you can afford more. A real estate agent can and will refer you to lenders (probably multiple so you can make the best choice to meet your needs).

What is the difference? The difference between a pre-qualification and pre-approval is basically documentation and verification. See, to attain a pre-qualification you simply tell the lender of your income, debts, etc. and he or she can estimate numbers based on your words (so don't fib- it won't help anything). A pre-approval, however, takes documents such as (but not limited to) proof of two years of work history, pay-stubs or income tax forms, copies of bank statements for source of funds verification and copies of charge card statements and runs a credit check in order to estimate your ability to pay a certain amount per month That estimated monthly payment can be transferred to a certain loan limit and more often than not (at least in this area) is given as 'Congratulations Mr. X. Our Bank has pre-approved you for $150,000 [and so on]'

Once you're set on a price range that you CAN afford and knowledge of where your MOST COMFORTABLE payment range will be and are armed with a pre-approval, you can get out and look look look. But first you need to be aware of your rights and find a loan that works for you! More on this Wednesday!