1. Decide what you would like to spend. Generally, you can afford a home equal in value to between three times your gross income. However, you may not be comfortable spending all that you can afford to spend. Develop a budget and be prepared to stay within your comfort zone. There is no use in falling in love with a home that is more than you want to comfortably spend. So set the budget and stick to it!
2. Develop your home wish list. Then, prioritize the features on your list. Don’t compromise on the things that you can not change. Remember finishes like paint, flooring and even square footage can be added to a home, but the big things like location and neighborhood restrictions can not be changed.
3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.
4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 3-20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price.
5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.
6. Determine your mortgage qualifications. How large of a mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages — and decide what’s best for you.
7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.
8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your first home without paying a penalty for early withdrawal.
9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.
10. Contact a CENTURY 21 Properties Plus REALTOR® to walk you through the entire process.