Looking for a new home can be an exciting and challenging experience.  The decision to purchase your first home is one of the biggest and best decisions you could ever make. Buying a home is the largest and most emotional investment most people will ever make.  There are many steps a potential home buyer must make before deciding to buy a home.  So, how do you know if it's the right time for you to buy your first home?

STEP 1: Decide if you are a Ready, Willing, and Able Buyer

As a potential buyer you must determine if home ownership is for you and/or your family. There are a plethora of responsibilities, and liabilities, when pursuing home ownership such as maintenance, repairs, and upkeep, which can become very expensive if a well thought out budget plan is not in place. Other factors must be thought out such as, but not limited to, job security, your current and potential future income, existing savings, school tuition, increase in taxes, emergency funds, etc. Most buyers feel they are ready to purchase a home, but in reality are not able due to the factors just listed. Other buyers are able, but discover that they are not willing to take on the responsibilities of home ownership, which make these buyers not ready. In order to determine if you're a ready, willing, and able buyer see the next steps.

STEP 2: Analyze Your Credit Report and Credit Scores

You need a 780 credit score to purchase a home with a great interest rate. The lowest credit score allowed for a Conventional Loan is 620. The down payment on a conventional loan is between 5% and 20% depending on the size of the loan and your credit score. You are required to pay PMI on a conventional loan only if you do not put at least 20% down. The lowest credit score allowed for a FHA Loan is 580. An FHA Loan is a mortgage that's insured by the Federal Housing Administration. They allow borrowers to finance homes with down payments as low as 3.5% and are especially popular with first-time home buyers.

Regardless if a buyer has perfect credit, or bad credit, an analysis of the credit report is highly recommended. Making sure the correct information is reporting on your credit report is imperative as a potential buyer because incorrect information will have a negative impact on your interest rate, and your ability to close the loan.  An early analysis will give a buyer time to delete any inaccurate, or accurate derogatory information from their credit report.

Before speaking with banks, or mortgage brokers, buyers should take all necessary steps to cleaning up their credit report and increasing their credit scores. Paying off balances on credit cards, and satisfying any outstanding debts should be a high priority.

Credit Repair Solutions

If a buyer notices inaccurate or accurate derogatory information in their credit report they can take immediate action. Buyers can correct this information on their own by disputing with the three credit bureaus online for free. Buyers can obtain a free copy of their credit reports at annualcreditreport.com. If there are a substantial amount of negative items that need deletion, there are credit repair specialist that can assist you with removing derogatory items.

STEP 3: Get Pre-Qualified

Figure out how much you can afford, or better yet, decide how much you’re willing to pay. Just because you can qualify for a larger mortgage doesn’t mean you want to have that kind of payment each month. Use mortgage affordability calculator to help determine what you can afford. Now is also a good time to research your housing market and start going to open houses in your prospective neighborhood to give you a good sense of what your money will get you. Pre-Qualifying is basically taking your income, debt, and credit report information to determine an estimate of the loan amount you qualify for.

STEP 4: Get Pre-Approved by a Lender

Pre-Approved is when you provide the same information as pre-qualifying but you’re now able to lock in a interest rate and obtain a commitment letter from the bank. A commitment letter states how much the bank will lend you. The pre-approved commitment letter gives you more negotiating power when you submit an offer. Real estate agents, sellers, and the sellers agent will treat you as a ready, willing, and able buyer.

STEP 5: Conduct your Neighborhood Due Diligence

Decide where you would like to live. This decision often includes locating neighborhoods with the best job opportunities, and schools for your children to attend. There are many websites on the internet that can assist buyers with local information.

STEP 6: Find a Real Estate Agent

Locate a knowledgeable real estate agent. Your agent should be able to provide you with the necessary knowledge and expertise to put you in the right direction. Provide as much information as possible on the prospective neighborhoods of interest. Once a real estate agent is aware that you have a commitment letter from a bank, they will treat you with a higher sense of urgency in locating your new home.

STEP 7: Find a good Real Estate Attorney

Locate a knowledgeable Real Estate Attorney. Your real estate agent may be able to assist you. Ask around. Search the web. Make sure you at least talk to them on the phone, and ask them how much they charge: this should be a fixed fee. You’re looking for someone who is honest, direct, and takes the time to explain the buying process.

STEP 8: Home Search

Your agent should provide you with immediate options of the different homes available for sale that meet your criteria.

STEP 9: Visit Properties

Once the properties are selected your agent should schedule with the sellers agent to view the selected properties.

STEP 10: Comparable Market Analysis

Once you have selected your home, have your agent perform a Comparable Market Analysis CMA on the surrounding properties in the neighborhood. The CMA should give you a clear indication of where to start with your first offer. It should also illustrate if the seller is pricing too high or too low.

STEP 11: Shop for Home Loan Rates

Many people including real estate professionals constantly use the words mortgage and home loan interchangeably. A mortgage is used as security to the bank for giving you a home loan. Home loans are available from several types of lenders which include thrift institutions, commercial banks, mortgage companies, and credit unions. Rates vary from different lenders as well as the loan types. The loan type can be an adjustable or fixed rate loan.  Make sure you become familiar with the various terms and words used when involved with shopping for loans.

STEP 12: Make an offer

Base off of your Comparable Market Analysis (CMA) you should be able to present a realistic offer to the seller.

STEP 13: Open escrow

Once your offer has been accepted the next step is to open up escrow. Ask your friends, relatives, co-workers, and others you trust for referrals to a reputable escrow company that was knowledgeable, efficient, friendly, confidential, and can expedite the process. You may possibly have to visit the escrow office more than once during escrow. So locating an office in your neighborhood is imperative. Prices do vary so definitely shop around for the best company with competitive pricing.

STEP 14: Home Inspection

You should hire a home inspection company to conduct a thorough inspect regardless if the house appears to be in great condition. The home inspection should include investigating the structural elements, exterior evaluation, roof and attic, plumbing, systems and components, electrical, appliances, and the garage.

STEP 15: Order Appraisal

The lender that you selected will request for an appraisal. The appraisal is not related to the comparable market analysis. The appraisal is performed to determine the current value of the home and provides much more details than the Comparable Market Analysis (CMA).

STEP 16: Order Title

The lender will order title to make sure the current owner is the true title holder. The title company will also issue a title insurance commitment.

STEP 17: Order Homeowners Insurance

Homeowners insurance is not related to title insurance. Homeowners insurance is obtained to provide protection of the dwelling, other structures, personal property, and loss of use.

STEP 18: Pre-closing

The pre-closing provides an opportunity to discuss any additional remaining topic before proceed with the closing. It is highly imperative to re-visit the property to make sure things are still working, and that no damage has been done to the property either by Mother Nature, or while the owner was moving out.

STEP 19: Closing

The closing is the final step in executing the pertinent real estate document to complete the transaction. You will receive plenty of documents to sign. This is when you hand over the final check to the seller, and the seller hands over the deed and the keys to your new home.

STEP 20: Moving In

Finally, congratulation you're a new homeowner!  Once moving in make sure you get familiar with your neighborhood, introduce yourself to your neighbors, and have important information available in case of emergencies.

ABOUT MAS CREDIT REPAIR

Marc A. Stephens (MAS) provides personalized consulting services to individuals and businesses. MAS has prepared the most effective credit repair process with over 15 years of proven results. Pursuant to United States Code Title 15 U.S.C. § 1681g(c)(2)(E) for credit repair, MAS can rapidly remove any item from your credit report, even if the debt is yours. MAS takes tremendous pride in ensuring that clients have a realistic plan of action to successfully repair their credit.

MAS will quickly delete the following items from your credit report:

Auto Loans, Bank Loans, Bankruptcy, Charge-Offs, Child Support, Collections, Credit Cards, Foreclosures, Home Loans, Inquiries, Judgments, Late Payments, Liens, Repossessions, School Loans, Utility Bills