Make yourself at home: tips for buying your first house

Jet, June 14, 2004

By the end of 2003, the U.S. Census Bureau reported homeownership rates had reached an all-time high 68.4 percent of Americans had invested in real estate. Were you one of these people? If so, good for you!

If not, don't worry. Here are some tips that will he]p you buy a home faster than you can choose a welcome mat.

KNOW YOUR RIGHTS

Before you start house-hunting, the U.S. Department of Housing and Urban Development (HUD) recommends you know your rights as a homebuyer. This will prevent you from being scammed and eaten out of house and home, before you even have one. For instance, the Fair Housing Act prohibits discrimination of potential homebuyers. To read this law, and several others regarding homebuyer's rights, check out the HUD Web site at www.hud.gov.

KNOW WHAT YOU CAN AFFORD

After you've read your rights, find out how much mortgage you can afford. As a general rule of thumb, lenders like your monthly mortgage payments to be no more than 29 percent of your monthly gross income (this is your monthly pay before taxes and other deductions are made). You can determine what you will be able to afford by using an online mortgage calculator, or you can get pre-qualified for a mortgage loan. This means you go to a lender before you find your dream home. You will need to bring with you, 1) your social security number, 2) copies of your checking and savings account statements for the past 6 months, 3) a recent paycheck that details your current earnings, 4) a list of all credit cards and the amounts owed on each, 5) a list of account numbers and balances due on outstanding loans, such as car loans, 6) copies of your income taxes for the last two years and 7) the name and address of someone who can verify your employment.

KNOW WHAT YOU WANT

Once you've gathered the paperwork, you need to create a checklist that will help focus your search. This will be helpful for the next step: finding a real estate broker. Talk to several to get a feel for the broker who makes you most comfortable because this is the person who will have to hold your hand through the entire process.

KNOW WHERE TO LOOK

With the broker in tow, begin your search. HUD advises you to help your broker help you by searching the Internet and local publications yourself.

KNOW WHAT YOU'RE IN FOR

After you set your sights on the domicile of your dreams, don't find out too late that it's a lemon! When you make an offer on a home, it's a good idea to make your offer contingent on a home inspection, HUD warns. You also should select an appraiser to value the home. Your broker may be able to assist you.

KNOW WHERE YOUR MONEY'S GOING

You've found the house, inspected it and appraised it. Now, you need to know just where your money is going. Your mortgage typically will cover four things: the principal, which is repayment of the amount you borrowed; interest that will pay the lender for the amount you borrowed; homeowners insurance that will protect your property against loss from fire, theft, smoke and other hazards; and property taxes that are annually assessed by your city and county governments.

Aside from the mortgage, you will be asked to pay closing fees, which cover the costs of processing your paperwork.

After that, signing on the dotted line is the last step.

Now go out there and find a house that you will be proud to call home.