NOW is the time......

Many renters wants to become home owners but their voices are lost somewhere in the loud noises of other people's opinion of whether they can afford a home or what they should or shouldn't do. So, here is what I am going to do for you, I'll break the home ownership process down for you step by step.

But before I do so, please click on this link: http://www.sovereignrealty.net/blog/rent-vs-buy-why-should-you-buy-instead-of-rent
read that short blog and then return to this page to continue. 

Now that you're back; I understand home ownership is not for everyone based on their circumstances but lets face it, on the first of each month you have to pay a rent for the roof over your head; whether you're living with family, friend or even renting an apartment of your own. When you rent, you write your monthly check and that money is gone forever, there are no returns on it and this is what your landlord is silently saying: "thanks for paying my mortgage". Instead of paying your landlord, you can pay yourself in the long run through paying down the principal balance on a mortgage on a house. All that monthly rent you’re paying definitely doesn’t accrue equity—in fact, you’ll never see it again. Whereas little by little, as you pay off the principal balance on your loan, your house builds equity. 

Equity is the difference between the market value of your home and the outstanding balance on your loan, or in simpler terms, the value your house builds over time.

Minimum Down Payment requirement for 1 & 2 Family Homes are 3.5% of the purchase price. Closing Cost is approximately 4-6% (this varies by lender) 


MONTHLY EXPENSES AFFILIATED WITH OWING A HOME

STEPS TOWARD THE ROAD OF HOME OWNERSHIP:

 1. Hiring a Licensed Real Estate Professional
NEVER go house hunting without a realtor. A realtor's  full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents and sellers. Both the buyer's and seller's agent work full time as realtors and they know what needs to be done to get a deal together. They will provide you with all the necessary documents needed in order for you to make your decision. Negotiating is tricky business, realtors act as a "buffer" with negotiations with all parties throughout the entire transaction and they will help with all disclosures and paperwork necessary in today's heavily regulated environment. Most importantly, your realtor will be there with you every step of the way to answer all your questions and address any concerns you may have. 

2. Getting Pre-Qualified 
Please, please do not go out looking for a house without your pre-qualification letter. This is the number one mistake 1st time home buyers make. In order for you to understand and know what you can afford, you MUST complete this step. Here are a list of documents you will need; 

• Most recent 2 years of Income Tax Returns 
• Most recent 2 years of W2 Forms (if not included in your tax returns) 
• Four (4) most recent pay stubs  
• Most recent 2 month's bank statements (all pages)
  

Once you gathered all the above documents, go to your financial institution (bank) or Mortgage Broker and speak with one of their Licensed Loan Officers about getting pre-qualified. Many lenders offer down payment and/or closing cost assistance programs to first time home buyers, be sure to ask your loan officer what programs are available to you. 

Even though your lender says they will give you a $450,000 mortgage, you need to figure out what monthly payments you can afford now and in the future. List all the things that you need to pay for, pay off and pay down.

3. Hiring a Real Estate Attorney 
You will need to hire an attorney to negotiate the terms and conditions of contract of sale and to represent you at the closing. Buying a home will probably be the largest and most significant purchase you will make in your life. It also involves the law of real property, which is unique and raises special issues of practice, and problems not present in other transactions. A real estate lawyer is trained to deal with these problems and has the most experience to deal with them. 

4. Finding Your Home
Before sitting with your realtor, here's what I want you to do; sit with those whom are involved in the home buying process with you and write down the features or characteristic or the house you want based on your pre-qualification. For example: No. of Families, City/Neighborhood you want to purchase in, Style of house (ranch, colonial) Brick/Frame, No. of Bedrooms, Bathrooms, Attached/Detached, Basement, Driveway, Backyard, etc. After you complete this, set up an appointment with your realtor to discuss your options. Please keep in mind, your first home may not be your dream home but you will get a change to personalize it to your liking and remember, realtor cannot show you properties that do not exist. 

5. Making An Offer
Once you find your home, ask your your realtor to checking the property for department of buildings violations, HPD Violations, liens and/or Lis-Pendens, etc before making an offer. After your realtor finishes his/her due diligence, he/she helps you decide on a good price to offer, and the offer is sent to the seller’s agent. Make sure your contingencies in the offer mention that you can back out of the offer if something major comes along in the inspection. Sometimes, you’ll hear back right away from the seller whether or not they accept.

6. Home Inspection
Once your offer is accepted, things will go fast. Your realtor can help you order the overall house inspection. A Home inspection is a non-invasive visual examination of a residential dwelling, which is designed to identify, observed material defects within specific components of said dwelling. Home inspections are usually conducted by a Licensed Home Inspector. The home inspector describes the condition of the home at the time of inspection in a written report but does not guarantee future condition, efficiency, or life expectancy of systems or components.

7. Contract Signing
The sellers’ attorney will prepare the first contract of sale. Your attorney likely will add an additional rider to the contract with terms to be negotiated with the sellers. Once the attorneys have finalized the contract, you and the sellers will sign it, and you will send the sellers’ attorney a down payment, which you may lose if you walk away from the deal without a reason contemplated by the contract. The down payment or contract deposit  will be held by the sellers’ attorney will deposit this amount into an escrow account.

8.Get Final Mortgage Approval
Once your offer to purchase is accepted, you'll work with your lender to get final approval for your home purchase by the date specified for the closing. The lender may require you to pay property taxes or homeowners insurance for the first year at the time of closing, so make sure you know what funds will be expected.

9. Preparing for Closing
First, the attorney will order a title report to see if there are any issues that sellers must resolve before a closing. These may include liens or violations against the property. Second, your attorney will work with you to provide information and documents requested by lenders in connection with your mortgage applications. Third, your attorney will calculate the amounts that you will owe at closing to the sellers, the sellers’ lender, and the title company, among others.

Finally, your attorney will represent you at the closing, reviewing and advising you on the documents that you are signing, such as the deed, transfer tax returns and mortgage documents, and making sure that all payments are accurately made.

In addition to the financial advantages of owning a home, there are many social benefits of owning a home as well. Home ownership gives family stability, creates lower high school dropout rates, and of course gives the opportunity to create meaningful and lasting relationships.

Now that you are informed, before you sign another lease, perhaps you should sit with a real estate professional in your area and discuss your options. Stop throwing your money away. Find out if home ownership is right for you. 

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