Think you're ready to take the plunge? Following these steps first will help ensure you're making the right decision.
you a first-time home buyer eager to get into the market? Here are
steps to take to help you decide whether you're ready to take the
plunge.1. Check the selling prices of comparable homes in your area. Web sites such as Buying Portland Oregon, Zillow, and Trulia can give you a general idea of what you should expect to pay. You can
also do a quick search of actual MLS listings in your area on a number
of Web sites, including the site of the National Association of Realtors.2. See what you can afford. Use Bankrate’s mortgage calculator
to see what your payment would be. To get a sense of the maximum you
should spend, use MSN Real Estate’s home affordability calculator
(below).3. Find out what your total monthly housing cost would
be, including taxes and homeowners insurance. To get a feel for the
maximum amount you should spend, including taxes and insurance, use MSN
Real Estate's home affordability calculator. In some areas, what you'll pay for your taxes and insurance escrow can almost double your mortgage payment. According to the Insurance Information Institute, the average yearly premium can range from $477 in Utah to $1,372 for unlucky Texans.
get an idea of what you'll pay in insurance, pick a property in the
area where you want to live and make a call to a local insurance agent
for an estimate. You won't be obligated to get the insurance, but you'll
have a good idea of what you'll pay if you buy. For an idea of what
you'll pay in taxes, Zillow publishes property-tax information for homes
all over the country. Just remember that exemptions and the intricacies
of local tax law (such as Florida's Save Our Homes value cap) can
create differences between what a homeowner is currently paying and what
you can expect to pay as a new homeowner.4.
Find out how much you'll likely pay in closing costs. The upfront cost
of settling on your home shouldn't be overlooked. Closing costs include
origination fees charged by the lender, title and settlement fees, taxes
and prepaid items such as homeowners insurance or homeowners
association fees. You can see what closing costs average in your state
by looking at Bankrate.com's annual closing cost survey.
Look at your budget and determine how a house fits into it. Fannie Mae
recommends that buyers spend no more than 28% of their income on housing
costs. Go much past 30% and you risk becoming house poor.6. Talk
to reputable real-estate agents in your area about the real-estate
climate. Do they believe prices will continue falling or do they think
your area has hit bottom or will rise soon?
Home affordability calculator
Combined annual income $
Other monthly obligations $
Cash for down payment $
Remember to look at the big picture. While buying a house is a great
way to build wealth, maintaining your investment can be labor-intensive
and expensive. When unexpected costs for new appliances, roof repairs
and plumbing problems crop up, there's no landlord to turn to, and these
costs can drain your bank account.So consider whether you're ready for the expense and effort of homeownership before pulling the trigger.
Need to get pre-approved? http://buyingportlandoregon.com/finance.php
By Claes Bell, Bankrate.com