There are some important parts of homeownership, and the homebuying process to be aware of before starting your process:
Being a Homeowner means you are responsible for paying for repairs and replacing appliances.
When you first move in, you may need the following:
As time goes on, normal maintenance and wear and tear repairs will likely be needed, such as:
It is best to get advice from a legitimate Housing Counseling Service.
Be aware of deceptive ads online, on television and on the phone that declare they can help a buyer get a home mortgage. Some are even disguised as government agencies. Be careful before putting information out there. Even just checking your credit score or searching for mortgage information could get you a flood of ads and phone calls.
The FTC has a guide called Deceptive Mortgage Ads | FTC Consumer Information. This guide tells you what to look out for.
Be suspicious if a mortgage company or a bank tells you that bad credit doesn’t matter, or doesn’t review your income against your debt, or has a balloon payment attached to the end of the mortgage or have prepayment penalties attached to the mortgage.
Although government mortgage programs might allow higher DTI’s, for your own piece of mind, try to keep the total of a mortgage payment, the taxes and insurance below 28% of your gross income.
Educate yourself and seek advice from a legitimate Housing Counselor. If you decide to go it alone, don’t let anyone sway you into purchasing a home you cannot afford.
There is an old saying that goes, if it seems too good to be true then it is. This could easily apply to rent-to-own schemes. In these types of deals, the seller offers to sell the home to a buyer who is currently renting or will move in as a renter to become the future owner.
So many things could go wrong for the buyer with this type of deal. Some rent-to-own contracts can be legitimate but they still may contain fees and charges that you wouldn’t normally have to pay. The FTC has information about rent-to-own deals that can be found here.
Be suspicious if a mortgage company or a bank tells you bad credit doesn’t matter, or doesn’t review your income against your debt, or has a balloon payment attached to the end of the mortgage or have prepayment penalties attached to the mortgage.
Educate yourself, seek advice from a legitimate Housing Counselor. If you decide to go it alone, don’t let anyone sway you into purchasing a home you cannot afford. Keep that mortgage payment below 28% of your gross income.
An Adjustable Rate Mortgage (ARM) will have a lower interest rate than a conventional fixed rate mortgage for the first few years. After that, the interest rate may go higher or lower, which would make a buyer’s monthly payments change.
These types of mortgages are complicated and after the first three, five or seven years, depending on the type of ARM the buyer purchases, monthly payments can rise. Unless the buyer is extremely confident in the ability to handle a bigger monthly payment in the future, conventional fixed rate mortgages would probably be the better choice.
However, some buyers who obtain an ARM refinance to a fixed rate mortgage when the interest rates go down. Right now, in early 2021, fixed rate mortgage rates are very low, so an ARM interest rate might not be much lower.
Because of laws passed after the housing crisis in 2007, terms of ARMs have improved, but still be aware of the possibility of having to pay higher monthly mortgage payments in the future. A one percent change in the interest rate could add an extra $100 to a buyer’s monthly payment.
Keep a record of past landlord issues.
Having some marks on your rental history will not disqualify you from federal housing, but be prepared to explain situations like an eviction.Steve Rubin says:
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