It is really quite easy to buy a home, and it is also a great idea right now, but what are the pitfalls involved? Well we all know the obvious foreclosure risks; I think most of us have read enough of that in the newspapers.
We can leave all that behind us now, because most of the laws governing risky loans have been cleaned up, and, in any case, there is a way to make sure that this will not happen to you. It is called a fixed rate mortgage and the amount you pay can be locked in for the number of years that you specify. (More on that later.)
First let us see how easy it is to buy a house. The number one thing you need here is a credit rating. If you have been paying all your bills on time, or have a good reason why you had a lapse and are now recovered, then you are in with a chance!
It does not matter how small your credit bills are each month, what matters is whether they have been paid on time or whether the minimum payment was paid each month. Even if your credit card limit is only $200.00 (is there such a credit card?) then if it has been kept up to date you have a good credit rating.
So first thing on your list is to check your credit rating; this should be on everyone's list because credit bureaus sometimes make errors on recording credit histories.
If your credit rating is imperfect then you must take steps to clean it up and to get a new credit card to start building credit. Often you can get practical help with this through a government sponsored agency, or a debt consolidating business. You can also go to a bank.
It is better to go to a bank and take out a loan to pay off your credit rating than it is to leave the debt in your credit history record. Once your credit rating is paid off you will need a credit card.
Most national banks will let you deposit a certain amount with them (say $500.00) and you can buy a credit card from them to the value of the deposit. You must not spend over the limit and you must keep the payments up to date. After about eight months of good credit you can try a mortgage broker and explain your position and see if you can qualify.
This brings us to the next step, finding a reliable financier and one who specializes in your required type of financing. Best place to start is your own local bank. It is also a good idea to visit a few financiers and let them give you a quote for the type of mortgage that you can qualify for.
This service is free and there is no obligation as most people 'shop around'; you may have to sign a paper to let them check your credit rating. Do not sign anything else; you also only want quotes for fixed mortgages (preferably that run for the minimum of a five year term).
This means that whatever you pay per month will stay that way for five years. Do not be tempted away from this plan by lower interest rates that are not fixed rates. Variable rate and 'other' rate types can rise unexpectedly and suddenly cost more in monthly payments. This part of it can take a while, as it is better to only deal with one broker at a time.
Once you have found a mortgage company that likes you and you like it, you can request a letter from them saying you are 'pre-approved'. This means that the finance company or bank approves you in theory, but they still have to agree with any house you may chose.
If a house is too old, or near a flood plain, or over-priced - or for whatever reason - it is not wholly approved, they may not wish to give you 95% of the value. They may only offer 75%, or they may say 'get the roof done' and then they will extend the loan. However, this 'pre-approved' letter means that you are one jump ahead of any other buyer making an offer who is not yet pre-approved.
That is the first long leg of the job done. Some of the other pointers like what type of property are you looking for and what type of realtor should you use are fairly subjective. One thing to consider is whether the house will 're-sell' easily at a future date.You will also need to ask your lawyer (in writing) to check any easements or future plans for the neighborhood.
One tip in looking for a realtor is make sure you can access his web pages easily and that you like his/her personality. If you are looking for foreclosed properties you will want an agent that is experienced in this field.
If you are considering this route, sit down with your real estate agent and also your lawyer and ask him/her to explain the procedures with you, it is a little more complex than buying a house the usual way.
The easy part comes now because your real estate agent will take you through most of the next steps. Making an offer, depositing a down payment, arranging a home inspection etc., in all these things you will guided by your agent.
If you find that you can only be pre-approved for a low amount which will not afford you a house, then you need to save more money. The only way you can find out what your chances are - is by inquiring!
Related Articles
Can You Really Protect Your Credit Rating?
By: SimonDuffy | 17/04/2008 | Credit
Your credit rating is basically your personal finance history, whatever accounts and forms of credit you'd had in the past and any missed payments, defaults or notices on those accounts are marked on your credit rating. Finance companies use credit reports to see how individuals manage..
Early Warning Signs of Debt Problem
By: Alexander | 03/07/2008 | Credit
How serious are your debt problems? The spectrum of possibilities ranges from negligible to severe. The fact that you bought this book indicates that debt is something you are concerned about. As you read this chapter and review the most common signs of debt problems, consider that the more signs that apply to you, the more serious your situation is.
Not All Debt is Bad
By: Alexander | 31/05/2008 | Credit
So you are in debt-who isn't these days? We live in a society that encourages people to go into debt. Credit card commercials tell us that a trip to Jamaica is just what we need, regardless of whether we can afford it. (That's what your gold card is for, right?)
Loan brokers want us to borrow up to 125 percent against our home equity. Even the federal government just had its first balanced budget in a generation and now faces the enormous task of paying off over trillions of dollars in debt.
Good and Bad Deals in Credit Cards
By: Alexander | 03/07/2008 | Credit
More of Wayne's Story
Wayne, who you met in Chapter 6, after reviewing all of the possible credit card types and options, has decided that he wants to get both a Visa and a Master Card
What the Rich Know That You Don’t
By: Alexander | 31/05/2008 | Credit
Becoming intelligent with money requires more than just getting out of debt. It also means making your money work for you instead of you working for it. It means earning interest instead of paying interest. It means buying assets instead of liabilities.
First Time Buyers Warned About Housebuying Costs
By: Steve Smith | 31/10/2007 | Non-Fiction
Non-professionals have been advised against being over-reliant on loans to fund any house purchase, according to a financial consultancy, as costs other than the mortgage itself mount up for homebuyers in the UK.
Make Money With Credit Cards, Loans and Debt
By: Allen Jesson | 13/12/2006 | Non-Fiction
It almost seems a contradiction in terms to say that to make money you need to create a debt but it is what businesses have been doing ever since they were invented.
Are you Allow to Keep your Credit Cards in a Bankruptcy?
By: Cornie Herring | 18/12/2006 | Finance
Many bankruptcy filers are wondering whether they are entitled to keep one or several credit cards for emergencies backup. This article will let your know under which circumstances you could keep your credit card in a bankruptcy.
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
Venture captial agreement
By: steve | 10-07-2008
looking for a contract format for drafting agreement with an investor to fiance growth
Currently I am interseted in buying a nonpoint red ragdoll cat in....
By: Sarah | 10-07-2008
currently I am interseted in buying a nonpoint red ragdoll cat in 2-3 years.I would like to know how much they would cost me,also I would like to know more information on them and see more pictures, if you know a great site or have your own red or non red raggdoll please send me pictures. I am very inertested! Thank you
Compensation or Trickery via Claims Inflation
By: Dee | 09-07-2008
Help.....I recently submitted a small claim to my homeowners insurance via a public adjustor at the reccommendation of a trusted friend....I recieved my payout amounts from the adjustor which incl. a 20% charrge to him,a 756.00 depreciation value for carpet replacement, and a 500.00 ded./ Does the ins. company award the tot. claim amt. minus the deductible or vice versa.....Basically when i questioned this, I informed the adjustor i felt as if I was paying my 500 ded. 2x's. Am I being paranoid or shafted.....What can I do.....Should I request the Exp. of Benefits for my claim from the ins. co...I need to know......The numbers do not add up....regardless of where they are strategically placed.....(Things that make you go hmmm).
need to be informed
By: mrs. johns | 09-07-2008
If I retire from the postal service and I am working 4 hours a day, will I still recieve the other 4 hrs pay from dept.of labor? I have a occupational disease which is ganglion cyst. I have worked 4 hours a day for the past 17 years.
Remove
By: Nina | 09-07-2008
I have a couple transactions on my credit report that has been paid. How do I get these transactions removed?
How do I defrost a Kenmore bottom freezer and refrigerator?
By: dorothy rastelli | 09-07-2008
We recently moved into an apartment and don't have a manual for any appliances. A bottle of a dark-colored natural vinegar was put in the refrigerator while in a plastic shopping bag. It tipped over and was slowly leaking for about a week before I discovered it. I tried washing the fridge out with baking soda and now have charcoal briquets in it. There is still a vinegary smell, even with all the food taken out and the shelves thoroughly cleaned. I would like to open the fridge door for awhile while the freezer stays cold. Would this be possible? If so, could I then reverse the freezer door staying open while the fridge is left cold? Thank you for your help.
Q&A Powered by:
Latest Real Estate Articles
Find Exotic Range of Villas and Apartments in Goa
By: JumpHigher | 26/07/2008
The beach attraction of Goa has extensive since been a favorite holiday destination among tourists. For most of the years, Goa is bathed in sunshine and it is fringed with acres of smooth sands and tropical warm waters. Goa is a muddled conflict of the Indian and European cultures. Although well-known for its serene beaches and calm vibe, Goa is a mixture of luxuriant countryside, tranquil townships and active markets. It is a perfect place for party lovers, as it you will find beach parties an
Holiday Homes – Stimulating Retreats for Tired Souls
By: JumpHigher | 26/07/2008
Goa is also known as ‘pearl of the orient’. It is situated in the south western coast of the India. It is blessed with naturally beauty with an excellent coordination of vast expansive beaches, fertile plains and forested hills. Goa is the hottest spot for holidays. This place is the major tourist attraction as the climate is favorable throughout the year. It attracts millions of tourists because of its beaches, resorts and its scenic beauty.
TIC: How is the Real Estate Community Involved?
By: Kathryn Landry | 26/07/2008
With the demand of prime properties worldwide, real estate communities are boasting of profits and capital gains when it comes to their acquired real estate. But despite the knowledge of these investors in the business, there is a way to consolidate as many properties as they can to maximize their profits.
Six Reasons Why Fixer-uppers are the Key to Financial Freedom
By: Sal Vannutini | 26/07/2008
Second only behind real estate development, fixer-uppers and renovating properties are one of the absolute best ways to turn a profit and increase your overall worth. Finding homes and apartment complexes or condominiums that are in need of repair, but still structurally sound, of course, is an excellent way to begin making money faster than you ever thought possible.
Debunking the Four Most Common Myths About Fixer-uppers
By: Sal Vannutini | 26/07/2008
Perhaps you have a bit of skepticism when it comes to fixer-uppers and making money, as after all, if it's that lucrative of a process, why don't more people do it? While a precise answer to that has yet to be discovered, there are several fallacies, myths, or excuses in some cases, about the entire subject, and we'll debunk four of them right here and now.
Know the Facts About Apr Rate - Annual Percentage Rate Loan
By: Bryan Burbank | 25/07/2008
When applying or searching for a loan one of the most important components o the loan is the APR rate which is the Annual Percentage Rate. This is the rate of interest that you will be paying back on the money that you borrow. It is important that when looking for a loan that you do a comparison of this APR rate because the difference in even a fraction of a point can mean big savings to you over the life of the loan.
The Pros and Cons of Living in New Jersey
By: Art Gib | 25/07/2008
Are the costs of living in New Jersey worth the comforts? Decide for yourself by reading the following article.
Buying Properties - 3 Things That You Need To Do Before Buying Properties
By: Cheow Yu Yuan | 25/07/2008
Are you intending to buy a property in the near future? If you intend to, then there are things that you need to prepare before you buy a property. Today, if you flip through your local newspaper or browse through the different websites online, you can see that there are always new properties for sale listings being put up by sellers.
More from Karen Hoeve
Condo Loans Becoming Stricter
By: Karen Hoeve | 03/04/2008 | Mortgage
The rules will state what percentage of units is allowed to be rental units. If you are planning to be a full time resident, you will want a complex which has a low percentage of rentals. (You also need to ask if the condos above you, below you, and to either side of you are rental units. This may be the reason why the condo unit is up for sale!)
Keep Your Driveway Up With the Joneses'!
By: Karen Hoeve | 31/03/2008 | Real Estate
We are always hearing about curb appeal and how it will improve our chances of selling if we pay attention to it. Well, technology has come up with a great way to help us to improve the curb appeal of our driveway, and this is also the latest idea so it will give your home the edge in the property market.
The Real Estate Alchemist: Dust to Diamonds
By: Karen Hoeve | 19/03/2008 | Real Estate
If the house is structurally sound, you just need to bring it up to snuff with the surrounding neighborhood. This is ideally a cosmetic job- one that'll require minimal funds and maximum sweat. You want to mine out a job you can do without hiring any outside contractors.
Get on the Trolley to a Hot Neighborhood
By: Karen Hoeve | 18/03/2008 | Real Estate
Buying a property in what might become an up and coming neighborhood can be a path to high points and big dollars with your housing investment. But, there are some points to consider when scouting one of these potential neighborhoods.
Mary, Mary Quite Contrary- How Green Does Your Garden Grow?
By: Karen Hoeve | 17/03/2008 | Gardening
Although gardens have that illusion of being "green" just by their very nature, truth is, in most garden centers, the supply sources for many gardeners, you will likely find rows of chemical pesticides and nitrogen fertilizers, products that have been linked to serious illness and the production of carbon dioxide.
Quality Public Education
By: Karen Hoeve | 14/02/2008 | Real Estate
In 2004 Forbes magazine ranked Raleigh, North Carolina's Wake County Public School System ( WCPSS ), third in the nation for "Best Education in the Biggest Cities". It's no wonder, as Greater Raleigh is able to provide superior education opportunities in both public and private settings. WCPSS is a national leader on the education front.
Rescue your Backyard From Boredom
By: Karen Hoeve | 13/02/2008 | Real Estate
You see them everywhere: empty, unused yards and wallflower decks adorned with nothing but a lonely barbeque. All over the country, the typical American backyard is a mass of untapped potential. So unnecessary! If you want to make the most of what your home has to offer, don't take this important living space for granted.
Market your Services to More First-time Buyers
By: Karen Hoeve | 06/02/2008 | Real Estate
First time real estate buyers are some of the most valuable clients out there, and the Internet is your best bet for attracting them. That's because new buyers are generally younger and spend more time doing research before entering the market, all of which adds up to more Internet use.
Finance 
