There is no doubt that market for houses has been on fire recently. More and more people are taking advantage of low interest rates and easy mortgage loan terms to go from being renters to being home owners. With so many people entering market, it is inevitable that questions will arise.
There are many things to consider when buying your first home. Some of most important steps to buy a house are:
Learning home buying process
Start by learning as much as you can about how home buying and mortgage application process works. Read as much as you can about buying a home. Check out many books in your local library that offer hints to first time home buyers. Read financial web sites on internet for tips for first time home buyers. You may even want to sign up for a class aimed at first time homeowners. Many towns and cities offer these kinds of classes, and they can be a great source of information for buyer looking for his or her first home.
Find out pre-qualified price range
It is important to find out how much you can borrow before you start looking for a home. Talk with several mortgage lenders in your area and get pre-qualified for a particular price range. The mortgage lender will be able to help you determine how much you can borrow based on your annual income. In general, mortgage lenders recommend that all home related expenses, including mortgage payment, insurance premiums and real estate taxes, do not exceed 28% of your monthly income.
Get Pre-approved for mortgage loan
The next step is to get pre-approved for mortgage financing. This is similar to getting pre-qualified for a price range, but it is a more formal process. You will need to supply proof of your income for pre-approval process to move forward. Most lenders will want to see income tax returns from past two years as proof of income you are claiming.
After you have been pre-approved for your mortgage loan, it is time to actually start house hunting with a realtor (find out why you need to find a realtor before buying a house?). Your mortgage lender will give you a letter stating that you have been pre-approved for a mortgage and amount you are authorized to borrow. You will need to present this letter to real estate agent when you get started. It is important to get pre-approved for a mortgage loan before beginning your home search. The real estate agent and real estate company will be much more willing to work with you if they know you can afford home you are looking at. In addition, sellers will take your offer much more seriously if it is accompanied by a pre-approval letter from your mortgage lender.