House Refinance Center
Buying A Home
Buying A Home: Don't Be Pressured
Into Overpaying Or Buying The
Wrong House




Buying a house is very stressful. The stress level is way up there with job interviews, marriage
proposals and IRS interrogations. We just can't afford to make a mistake. However, the
process could be easier on our hearts and ulcers if we prepare. If you need to buy a house,
here are the steps.

Select a lender and get approved.

We all deal with a bank. But do we really have a relationship with the bank? Not really. People
at the bank come and go, and we just say "Hi", "Have a nice day". We do not know the
employees' name and they know nothing about us. So we need to walk into two or three banks
and interview the lenders. Ask them what they have to offer you and why they are the best
choice for your business.

Once you have selected a lender you should ask for a pre-approval letter. The more specific
the letter the better. The letter should state the maximum loan you are qualified for based on
your income, your debts and your down payment.

Select a realtor and find a house.

The same process you used in selecting the lender use a similar approach in finding a realtor.
Be wary of using a friend's realtor. What worked for your friend or for a relative might not work
for you. You need a buyer's agent. This is a realtor the finds houses for a buyer. There are
realtors that list houses to sell. They work on the other side of the fence and might not be too
happy taking a prospect to 20, 30 or 40 houses. They might get impatient and want the buyer
to sign a contract after the third house.

Be specific in selecting your home. Sit with your realtor and make a list of "must haves", "nice
to have but can live without" and finally, "no, no, hell no".

Must have would be things like the number of bedrooms and bathrooms, or walking distance
to a school. If you need 3 bedrooms then it would be a waste of time to look at houses with 2
bedrooms. If the school is 2 miles away then you do not want to look at houses in that
community.

You realtor should be able to help you obtain some crime reports and statistics for the
community you are considering moving into.If crime is a problem your house value could
plummet in a very short time. Your safety and your family's safety is also at risk.

Get the house inspected and seal the loan.

Once you have selected your house and made the offer, be sure that your realtor protects your
interest. Your offer should be subject to a satisfactory house appraisal, a house inspection and
termite inspection.

At this point your realtor should be trying to get a better price on the house. At the very least, he
or she, should ask for new floors, or new carpeting, or new appliances, anything to make you
happier.

Now that all the bases are covered and the house is sound structurally and termite free, you
have to finalize the loan. Remember, your pre-approval is not a firm commitment from the bank
to lend you the money. It only states that you qualify. At this point you need to fight (negotiate)
with the lender for the best rate. Don't feel that you are insulting the loan officer, he or she gets
this everyday. It's expected. If you accept the first rate that is thrown at you, the lender might
think at you are a bit odd.

Close the deal.

Your lawyer or closing agent will gather all the documents and close the deal. Your deposit will
be put into an escrow account. All the closing costs will be itemized and verified.

When all the paperwork is done, you will go the closing agent's office sign the documents and
get the keys to your house.


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Are You Ready For HomeOwnership?
The residential housing market is just ripe for buying a house. Inventory is high. Interest
rates are low. Prices are declining. But before you rush out and start shopping, stop and
re-evaluate your situation. There are a few things you should do. Seriously ask yourself
"should I buy a house?".

Your credit.

Before you start house hunting be sure to order copies of your credit report. The three
credit reporting agencies are Equifax, Experian and TransUnion. You are entitled to a free
report one time each year. Check the report to see if there are any errors. This gives you a
chance to get the errors fixed before you apply for a mortgage.

Debt to income ratio.

The debt to income ratio tells the lender if you have the financial ability to make the
mortgage payments. You should also pay attention to this number. Total all your monthly
expenses. This includes your mortgage payment (PITI), your car payment, your student
loan, credit card balances (use 3% of the average monthly balance). Take this number and
divide it by your monthly gross income. For example if your expenses are $3,000 and your
income is $9,000, your debt to income ratio would be 33%. Lender refer to this as the
back end ratio and like to see it at 36% or lower. The lower the better. It says that all your
income is not going to pay debt. It also indicates that you have a cushion to fall back on if
there is an emergency.

Ready to put down roots.

Owning a home require a solid commitment. Are you prepared to stay in one place for 10
years? Can you handle the minor repairs and maintenance that comes with home
ownership?

Buy where there are good schools.

Do not underestimate good schools. You might not have children. But this shouldn't stop
you from seeking a neighborhood that has excellent schools. When it is time to sell and
move on, you would see that your selling price would be substantial. In addition, it widens
the circle of potential buyers.

Closing costs.

Budget 4% of the price of the house for your closing costs. Many home buyers forget about
the closing. Accounting for this amount in advance will help your real estate agent present
the offer correctly. If you do not have the money for closing, your offer will be closer to the
asking price, but you will be asking the seller to give you the closing costs. You will not get
the full amount, but the seller will send back a counter offer for a portion of the closing costs.
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Home Buying Mistakes
Buying a house is stressful. To reduce your
stress level and also save yourself
thousands of dollars, avoid making common
mistakes.

A common mistake is focusing on the house
and forgetting the neighborhood. You have
the visit the neighborhood at least six times.
Check it out at night to see if there are
corners that young people just "hang out".
Go back and look at the neighborhood on
weekends. Are there lots of partying? Is
there loud music? You might want to contact
the local police. Get some crime statistics.
How often are police called to the street
where you are thinking of purchasing? While
you are in the neighborhood, look for
abandoned vehicles, burnt out houses or
houses with broken windows.

You have to go slowly and check every
detail. Nothing is too small to just ignore.
Two places to get information is a church
and the local community center.

Watch the slideshow.
More Homebuying Info