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 Online with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright. All rights reserved.

Question of the Week

What was your most memoriable vacation?

Sandee Williams - Hawaii in Oct 2009, relaxing, wonderful vacation with my hubby :)

David Lenarcic - In May/June of 2008 my wife and I went to Belize and Guatemala for two weeks.  It was a very adventurous vacation.  We went to several Mayan ruins, we went cave exploring, we were stranded on an island during a tropical storm.  It was very exciting and fun.

Steve Williams - Going to Alabama this week for a mini vacation to watch John graduate from Air Force officer school. Proud parents and sis get to watch the ceremony!

Christy Voigt - New York for Thanksgiving! It was amazing!!

If you have been waiting to buy it might be time to get off the fence. California's inventory of unsold, previously owned homes shrank to a five-year low in December, in another sign that the state may be coming out of its worst housing slump in decades.

The supply of unsold single-family homes dropped to 3.8 months from 5.6 months a year ago and 16.6 months in January 2008, when inventories were at a peak, according to estimates released Friday by the California Association of Realtors. The inventory levels are now at their lowest level since 2005, resulting in frenzied sales with multiple offers in some cities. Read more…

• Some economists believe that California’s housing inventory is artificially low because many discretionary sellers—homeowners who do not have to sell their homes—are waiting on the sidelines until home prices rise.  Others believe there are more foreclosures to come, as unemployment in the state continues to rise.  However, C.A.R. predicts that foreclosures will remain flat in 2010 compared with 2009, as lenders are listing properties for sale at a more metered pace.
• California’s housing market has shown signs of stabilization since early last year.  Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its trough in February 2009. 
• In December, the median price of an existing, single-family home rose to $306,820, an 8.4 percent rise year-over-year, the second consecutive year-over-year increase, and the 10th straight month-over-month increase, according to C.A.R.’s December sales and price report.
• With affordability near-historic highs, low interest rates, and home buyer tax credits, many properties in California are receiving multiple offers and sparking bidding wars.  Home buyers who find themselves in bidding wars should work closely with their REALTOR® to ensure they are crafting realistic offers that are more likely to be accepted by the seller.

Mortgage rates in 2010 are expected to rise from 2009’s historically low levels.  Early last year, the Federal Reserve announced plans to purchase debt and mortgage-backed securities from Fannie Mae and Freddie Mac to lower interest rates for consumers and spur home buying.  As a result, rates on 30-year, fixed mortgages fell to historic lows.  However, the Fed’s asset purchase program is scheduled to expire at the end of the first quarter of 2010, and a lack of private demand for mortgage-backed securities could lead to a rise in rates.

Falling behind? There’s help available. Struggling to pay your FHA mortgage? Now you no longer have to be late with your payments to get help.

On Friday, the Federal Housing Administration announced that it will assist borrowers before they become delinquent. All you need do is prove your problems were caused by a reduction of income from a job loss, fewer paid hours, slashed wages or a decline in self-employed business earnings. Read more…