Step-By-Step Guide for First-Time Home Buyers

There are many thins included in purchasing a home: attending open houses, crunching the numbers, filling out applications and deciphering the home inspection report.

This timeline will assist you with all of the parts of your purchase.

STEP 1: Evaluate your life and finances

Before you even look at homes, take a good look at your situation and crunch the numbers to see if this is the right time for you to buy.

  • Calculate a monthly mortgage payment you can afford.
  • Create a budget for monthly homeowner expenses.
  • Check your credit report and improve your credit score.

STEP 2: Do your homework

Prepare to do more research and evaluation. It may seem tedious now, but this discipline will serve you well as a homeowner. Learn about your prospective new neighborhood if you don’t live there already, and prepare for the loan process by determining where your down payment and closing costs will come from.

  • Research the market where you want to buy.
  • Figure out how you will get a down payment and pay closing costs.
  • Using your budget, determine how much home you can afford.

STEP 3: Shop for a loan

You’ll be borrowing tens of thousands of dollars, so shop for the best interest rates and loan terms. Buying a home involves more than the sales price; there are fees for every part of the process. Make sure you understand everything you’re paying for.

  • Learn the basics about your mortgage options.
  • Shop for the best mortgage rate and loan terms.
  • Get pre-approved.
  • Figure out the impact on your taxes.

STEP 4: Find a house

It’s time to go house hunting! Hire a real estate agent to set up home tours and guide you through the process.

  • Choose a neighborhood and type of house.
  • See what’s available online.
  • Shop for a real estate agent.
  • Calculate the home’s market value.
  • Make an offer.

STEP 5: Sign the contract

Unless you made a low-ball offer that offended the seller, expect to negotiate. The key is to find terms you both can agree on.

  • Finalize the purchase and sale contract.
  • Choose a title and escrow company that will research the title and coordinate the closing.

STEP 6: Close the deal

During the closing period, you’ll get an appraisal, title search and exam, home inspection and homeowners insurance. If all goes well, you’ll sign the paperwork and the keys are yours!

  • Get an appraisal and a home inspection.
  • Get homeowner’s insurance quotes and pay the premium.
  • Consider and plan any improvement projects that require immediate attention after you move in.
  • Do a final walk-through of the house.
  • Plan your big move.

If all goes well, you’ll sign the paperwork and the keys are yours!

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Consider Using FHA to Sell or Buy a Condo

 

FHA  (Federal Housing Administration) is mortgage insurance that provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. FHA-insured loans require very little cash investment to close a loan and there is more flexibility in calculating household income and payment ratios.

When buying or selling a condo unit eligiblity of the condominium project requires that they meet certain guidelines.

The following requirements must be satisfied before a loan is endorsed:

The condominium project must be complete. There should be no ongoing or anticipated addition of any units, common elements, and/or facilities.
Control of the common areas of the project must have been turned over to the unit owners association for at least one year.
The owners association must provide evidence that the project has the appropriate hazard, liability and flood insurance.
Individual units in the project must be owned in fee simple or be an eligible leasehold interest. The project’s legal documents must provide for undivided ownership of common areas by unit owners. By virtue of this ownership, unit owners must have the right to use all facilities and unrestricted common elements.
The project’s documents should not place any legal restrictions on conveyance. Any provisions that seek to limit the free transferability of title is generally unacceptable. Such restrictions include rights of first refusal and restrictive covenants. Certain governmental or nonprofit programs designed to assist in the purchase or rental of low- or moderate-income housing are exempted from the restrictions on conveyance provisions.
At least 90% of the units in the project must have been sold.
At least 51% of the units in the project must be owner-occupied.
No single entity may own more than 10% of the units in a project. “Entity” includes an individual partnership, corporation, limited liability company, limited liability partnership, joint venture, investor group or other natural or legal person qualified to hold an interest in real property. The 10% restriction does not apply when the ownership of less than three units would disqualify an otherwise eligible project.
HUD recognized that the 10% cap on the number of units that may secure FHA insured mortgages in a given project can place a small regime at a disadvantage, since only a few units will invoke the limit. Accordingly, a two-tiered system was established. For condominium projects having more than 30 units, no more than 10% of the units may have FHA insured loans at any given time. Condominium projects consisting of 30 units or less, can have up to 20% of the units encumbered by FHA insured mortgages under the spot loan rule.

If your are a buyer, enjoy the benefits of a lower downpayment and softer underwriting standards.

 
   
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