Hi there. This is an exciting time for you, buying a home, but I know it must be a bit stressful for you too.
You need to start by speaking with a direct, national lender. They will ask you a lot of questions about your income, assets, credit and the types of properties you will be looking for. Be honest with them - let them know what kind of payment you are comfortable with. They will translate that into a purchase price for you. Keep in mind that no calculator or website will be able to dictate what you can and cannot afford. There is so much that goes into a loan approval!
They'll put together a couple loan options for you and explain them all in detail. You'll have a lot of questions too, but that's good - don't commit to anything until you understand. Find a lender who will take the time to make sure you understand.
If, after going over what the lender proposes, you feel comfortable, you can move forward with a full application and they should have a full approval for you within a couple hours. Then you can start working with a Realtor and begin house hunting. Your Realtor and lender will work together to put together an offer and walk you all the way through to closing. The whole process up to closing will take about 21 days after you sign an accepted purchase agreement.
If you find you are not ready to buy a home after your research with your lender, that's okay too. Ask your banker for tips on getting yourself in the best position to buy and keep in touch with them. Buy a home when you feel completely comfortable with the payment and the loan.
I included a link about full approval. Feel free to contact me directly if you've got any more questions. Best of luck!Mortgages..?
Start with getting a copy of your credit report.
Dont buy a house without a down payment either, you are just setting yourself up for trouble.
Buying vs Renting sounds like the question you are asking....
First, consider the big picture: total cost and risk / reward.
If you rent you know the montly payment, you are [typically] not responsible for mantenance cost / repair, etc. You are not ';exposed'; to major problems: cracked foundation, flood damage, earthquake, etc. Further, you are insulated from asset value fluxuations due to economics, tax law changes, county, city and municipal changes related to schools and taxes. You are also ';more limited'; as to your ';control'; over the house - aka your landlord can increas rent,. etc.
In Texas the cost of home ownership is typically @10%/ Yr of ';fair market value'; -what the house is worth [what someone would pay for it] So, a $300,000 home would cost you apx. $30,000/yr to own [as an expense] This is based on today's risk free return rate and borrowing costs [makes no difference if you pay cash or take out a loan. If you pay cash you still need to ';pay yourself'; for the oportunity cost of tieing up $300,000 in an asset... right now you can buy a CD with 7yr maturity [typical people move in 7yrs] FDIC insured with a %5+ yield (as good as guarenteed risk free). So the Texas real eastate tax rate is btwn 2 - 3% annual fair market value + Insurance .5% + Risk free rate 5% + Maint / Depreciation 1% + Risk premium [TBD based on your asset - comp to lets say ';junk bonds'; yield 4% over risk free rate]; so, you can see you are at 9.5% expense not even paying yourself a risk exposure premium.... So, ';to make money'; you would need to have your house appreciate over 10%/yr..and liekly 14%/yr to be comp. to market risk return rates. [this does not include Transaction costs that are typically large w/ real estate].
Bottom line a home is an expense... and the value of owning is more of an emotional decision that seldom considres the financial implications. You own a home b/c you like the idea of long term ownership and pride of ownership. The house as an investment needs to fit your total wealth profile - as this ';invetment'; is typically heavily leveraged and very speicifc to a single market [non diversified] - 1/4 of a person's wealth tied to a house is 1 thing... a liability of 80% total wealth is dangerous. Meaning - I have a $1mill net worth and $800K home; or $250K net worth and $200K home, etc.
But what about the huge appreciation in the housing market over the last 13yrs you ask./... what about the idea that houses [long term] always appreciate [ask your parents what they paid]... what about the house flip boom that made many people rich and new TV shows such as ';sell this house';?
The last 13yrs are ';very special'; in terms of real estate value appreciation. No one should expect this trend to continue or repeat. First: the Gov. limited expensing [on Fed taxes] to mortgage interest only [you used to be able to expense credit card interest as well]. Then the Gov. passed the Tax Free cap. gains tax law that provided NO FED income tax for all home appreciation up to $500K [appreciated value per couple evry 2 yrs] WOW! At the same time banks are more like Investment houses and Investment houses started offering investment services. Then loan syndication started... pooling of similar loans, to securitise a new issue of debt - slice and dice and sell off to the open market - this took a great deal of liability off the bank ballance sheet and allowed them to lend more - thus focus on supply of new mortgages to Wall St - who had plenty of buyers, etc. Bottom line - money is flowing like no other time in history - keeping rates low. I am not even going into Genni and Freddie and FHA, etc - Gov. programs to reduce borrowing costs and increase home ownership - they purchase or originate under special Gov. manadates and have quazi Gov. backing - not to mention the bigger players like Countrywide have access to the Fed discount window - as a bank would - to allow for access to lower Capt. costs for funding loans. I could go on and on - ....
Bottom line Gov. created a bubble: why? B/c some years back under Bush Sr. a study was done that concluded high % of American Home ownership is good for the economy, reduces crime, and improves society as part of the nation. After this - the Gov. set about to make it happen.... Problem is, the Gov. did not consider the Risk / reward equation of ';encouraging'; HUGE personal leverage and poor lending standards. Too many people are not diversified enough.
You want to retire young - live in a ';shelter'; that is the lowest total cost to you [tent if you have to]. But, homes are emotional and part of lifestyle and identity - some by a Lexus... others pref the $500K home on a $80K income... all choices.
My husband is a loan officer at Chase Bank. He will ask you a series of questions and help you decide what you can afford and get approved for. Shoot me a msg if you would like his contact info.
MORTGAGES they suck!!
Start talking to a loan officer, and definitely check out Di-Tech.com.
Actually, depending on where you live, right now is not the best time to buy. If you live in Florida, like I do. Not only do you have to pay the mortgage, but then there's the property taxes, which is based on the price of the house. Then there's the storm insurance, which can run you anywhere from $3k to $8K a year.
Depending on where you live, renting is not such a bad idea, at least for the time being. Besides, prices on homes are not supposed to bottom out until the 2nd quarter of 2008.
Good Luck
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