An EzineArticle by Martin Lukac.
There are so many emotions connected with buying your first house: stress, anxiety, anticipation, doubt, joy and fear. Not only are first time buyers nervous about the process of buying a home, they are especially worried about being rejected for their mortgage. Many will continue to rent a home, even though they are excellent candidates for buying. They worry that their credit will not allow them to qualify for a mortgage.
Most home buyers look at not qualifying for a mortgage as an embarrassing experience.
Most people will only take the plunge when the cost of renting far exceeds the fear of rejection. Buying a home represents the largest financial investment most people will ever undertake. The renter may decide to look for a home when he or she realizes that they are basically paying their landlord’s mortgage.
Once they look at the benefits to owning a home, the fear becomes a little less and they take the first steps.
Most first home buyers worry about the finances involved in purchasing a home. Do I qualify? What if my credit is bad? How much will it cost up front? What type of mortgage? And the list of questions go on and on.
The internet is a perfect place to research the home buying process, starting with financing and ending with your tax benefits. There are many forums and news groups that share the home buying experience with new buyers.
The best way to face your fear is to understand what will happen when you buy a home. In real estate, knowledge is a huge negotiating tool. If you are well-informed, you will find the best mortgage with the best terms for your financial picture, a home that will appreciate and a closing that is smooth sailing.
Start with learning how finances start. This is a road to a new life, one of financial freedom and home ownership. If you don’t already have a budget, you need to take the time and create one. Take an hour or two and sit down and write out all of your monthly expenses. Include every single debt and bill. Be honest with yourself.
Take the time to list each account, account number, interest rate and outstanding balance. You will need all this information for your mortgage application, so you might as well gather it now. This is a great time to look at what you are spending in interest rates — a first step in deciding what debts to pay off first.
Include all of your housing, utilities, automobile, grocery and luxury expenses. Be honest. If you spend $200 each month at Walmart, don’t write down $100 as a wishful thought.
Now subtract all of these expenses from your income. The bottom line should show a positive number. If you are on a roll and see that changes need to be made, go ahead and write out your financial plan of action. This is the steps you will take to change your budget. For example, you may start your list with paying off your highest interest rate credit card.
Having a budget shows how much you can afford to pay each month towards your new home. If the lender tells you that you can afford more than you figure, don’t listen. Only you know what your final budget looks like. Most lenders will try to talk you into a larger mortgage — but you are smarter than that.
Don’t be afraid. If you do a little homework, you will know exactly what to expect. Even if you don’t have perfect credit, there is a mortgage out there for you. First time home buyers make up a large part of the market. You will find plenty of professionals willing to help you through the process. Don’t let fear keep you from your dream home.