10 Ways to prepare for Homeownership in 2012.

Ready, fire, aim.  I am determined to discount those leaders, managers or friends of mine that exhibit this characteristic in 2012. One of my heroes from history is our second President, John Adams. Mr Adams, as I have read, was notoriously impatient in convincing others to adopt his point of view. It did not  matter how noble his intentions were. He was prone to exhibit a somewhat volatile temper in persuading colleagues. I think the real brains behind his effectiveness was his wife Abigail who on more than one occasion suggested to him, “Mr. Adams hold you tongue.”  If you are a history buff like me, I would recommend David McCullough’s biography entitled “John Adams” to see how they operated as a team.

Buying a house should not be akin to going to war to start a revolution. But I have to say that after 30 years+ of working with couples, on occasion the similarities can make one pause.

Preparing  for a decision in business, let alone life, would seem to make common sense. But make no mistake, the process of home buying is emotional as well as financial. I have seen it begin with well intentioned reason and some measures of stoic expression, but evolve into an all out emotion packed cacophony that would make my Italian relatives proud.  But I should note that my wife Gloria has also rightly accused me of  exaggerating life’s little disruptions.

So one should plan and prepare. I think  the National Association of Realtors gives good advice to clients as well as Realtors in preparing to enter the market place for 2012. With their permission I reprint  “The 10 ways to prepare for Homeownership.”

10 Ways to Prepare for Homeownership

 

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment?  Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price.

5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.
6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.

8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.

9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process.

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®.

Copyright 2008. All rights reserved.

Make sense? I certainly hope so. If I could add one item. Don’t forget the government programs; FHA, VA and USDA home loans.  These are loans that you can get with as little as no down payment for VA and USDA  and 3.5% down for FHA.  But make sure you are comfortable with those types.  In our market,  going in with little or no equity doesn’t make much sense if you are not going to be living there for several years. 2012 could be exciting for you as a buyer.  That goes for real estate agents also.Prices and interest rates have never been lower. Sellers are motivated. And the banks are sitting on a pile of inventory. Go ahead, pull the trigger… but don’t forget to aim.

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