1. Find out how much house you can afford & your total monthly housing estimate.
Include taxes and home insurance in your cost. In some areas, what you’ll pay for your taxes and insurance via escrow can almost double your mortgage payment.
Compare mortgage rates now to find the right loan for you.
To get an idea of what insurance will cost you, pick a property in the area where you want to live and make a call to an insurance agent for an estimate. You won’t be obligated to buy the policy, but you’ll have a good idea of what you’ll pay if you decide to buy. To estimate what you’ll pay in taxes, check your county assessor's website www.https://mcassessor.maricopa.gov/
2. Talk to reputable Realtors in your area about the real estate climate. Do they believe prices will continue rising or do they think your area has hit bottom or will be lower soon?
3. Check the selling prices of comparable homes in your target area
Have your realtor do a quick search of actual multiple listing service, or MLS, listings in your area on a number of websites, including the Realtor.com
Use Bankrate’s mortgage calculator to get an idea of what your monthly mortgage payments would be if you bought today.
4. Examine your credit
Fannie Mae recommends that buyers spend no more than 28 percent of their income on housing. Push past 30 percent and you risk becoming house-poor. Blemished credit or the inability to make a substantial down payment can put the kibosh on your homeownership plans. That’s why it pays to look at your creditworthiness early in the homebuying process. Get your free annual credit report and examine it for errors and unresolved issues. If you find mistakes, contact the credit reporting bureau to make sure they are corrected. It’s also a good idea to get your FICO credit score, which will cost you a small fee.
Get your credit report and score today for free and with no obligation at myBankrate.
5. Find lenders and get pre-approved.
Getting pre-approved for a mortgage is a must in today's housing market while you are house hunting. The institution where you bank and a local credit union are good places to start your search. Applying to multiple lenders in the same month helps increase your chances of getting a loan approved at the best rate possible without dinging your credit score too much. Collect pay stubs, bank account statements, W-2s, tax returns for the past two years, statements from current loans and credit lines, and names and addresses of your landlords for the past two years. Have all of that paperwork ready for the lender. It may seem like a lot, but don’t be surprised if your lender wants a lot of documentation.
Consider getting an FHA loan. The Federal Housing Administration has a program that insures the mortgages of many first-time homebuyers. As a result of this guarantee, lenders who might otherwise feel queasy about your qualifications will be more inclined to lend to you. As a bonus, the FHA requires a down payment of only 3.5 percent from first-time homebuyers, but there is mortgage insurance added.
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