First Home Buying Must-Dos to Make the Process Easier

August 27, 2013

First time homebuyersBuying your first home in Chicago will be a stressful process. A TD Bank Mortgage Service Index survey released in April said 69 percent of buyers found the homebuying process stressful, and of those, 25 percent called it “extremely” or “very” stressful and 45 percent called it “somewhat” stressful.

But you can avoid some of the common stressors by having your finances in order before beginning the process, and the real estate pros at the Equifax Finance blog give some tips on how to do that in their recent article,

Buying a Home? 5 Things Every First-Time Homebuyer Must Do.”

Many first time buyers fall into the pitfall of wanting to get the most expensive home possible. The experts in the article say you should plan to spend between 25 and 33 percent of your gross monthly income on housing expenses, and mortgage lenders won’t let you spend more than 36 percent. Remember when deciding how much to spend that interest rates are rising and could impact how much of a home you can afford.

Once you know how much you can afford, decide how much you need to save and where you can start cutting back for your down payment, which will be at at least 3.5 percent of the purchase price of the home. Reduce unnecessary daily expenses, create a budget and savings goal to help you get there faster. The experts do not advise buyers to borrow from their retirement savings for a down payment;; as they will have to pay that back with interest later.

Educate yourself on lending guidelines and what you’ll need to present to your lender. You can find current copies of lending guidelines online for Freddie Mac, Fannie Mae and the Federal Housing Administration.  Gather all of the paperwork that your lender will need, including W2 forms, copies of completed federal tax returns for the last three years; copies of one month’s of pay stubs; and copies of the last two or three bank statements for every bank account, IRA, 401(k), or other retirement or brokerage accounts.

Get the rest of the tips in the full article on the Equifax Finance blog. While there, you can also get other advice on real estate, from buying a home to current market trends to upgrading and insuring your home.  The site also has loads of helpful articles on other personal finance topics, like

credit scores, credit reports, taxes, insurance, retirement and savings, identity theft protection and more.

About The Author

Read All Stories By Ben Heisler

Ben Heisler works as an account coordinator for clients involved in the housing market, construction material, rentals, personal finance and more. Visit my Google+ profile.

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