Buy A Home

• Tax incentives – tax deductions for mortgage interest and property taxes, loan points for a purchase mortgage are fully deductible in a year that they are paid
• More stability for homeowners – the longer you stay in your purchased property, the more established you will become (stable job, building lasting friendship in the neighborhood, continuity in education for children)
• Property appreciation – the value of most homes rise through time
• Ideal environment for families – studies in the past have shown that those who own homes have happier family members and this is attributed to the kind of environment lived in.
• Having a place you can call your own – home ownership provides a sense of security in life and satisfaction

Suze Orman, a financial guru and author of a popular book titled The Road to Wealth, recommends the following steps to test your home purchasing power:

Step 1: Figure out how much buying a home (in your estimated price) will cost you monthly, including monthly expenses.
Step 2: Subtract your monthly rent from the amount you came up from step 1 (e.g. home ownership: 1900 – rent: 1500 = 400 difference); take note of that difference
Step 3: Open a new bank account and make a deposit on the first day of each month (in our example, it’s 400)
Step 4: You make a deposit each month in 6 months; if you can make it without delays or late payments or if the process does not cause you ‘financial stress,” then it’s a good indicator that you are capable of buying a home.

• Reducing debts and or expenses – the principles of ‘wants’ and ‘needs’ are applied to effectively reduce your debt and expenses
• Develop a healthy budget habit – as you filter out the unnecessary spending, you can begin developing a healthy budget list
• Build up savings for down payments and reserves – 20% or more for a down payment is recommended by experts
• Keep a tab on bills – keeping track on bills/expenses helps to control unnecessary spending

1. Pre-approval – be pre-approved and when pre-approved a buyer’s negotiating power is increased
2. Loan search – a mortgage professional can help find the best loan deals in town
3. Property hunting – begin the property hunting and start negotiating for the best deal
4. Loan application – all the needed information should be supplied and make an effort to be as accurate with the information as possible
5. Documentation – submission of all of the paperwork supporting your application to your loan professional
6. Appraisal – this allows buyers to know the real value of prospective homes to avoid overpaying
7. Title search – know if there’s any outstanding debt by the owners or any other issues
8. Termite inspection – termite and water damage problems should be addressed before closing
9. Processor’s review – all pertinent information will be sent to the lending underwriter by the mortgage professional
10. Underwriter’s review – based on the information submitted by your mortgage professional, the underwriter will make a decision on loan approval
11. Mortgage insurance – usually required for those borrowers that pay less than a 20% down payment for the property
12. Approval – when specified requirements are met the mortgage loan is approved
13. Other Insurance – you will be required to attain several types of insurance such as hazard, flood, or even earthquake insurance
14. Signing – signing the necessary paperwork for final loan and escrow
15. Funding – amount of loan is sent to the title company
16. Closing – documents transferring title will be officially recorded by the County Recorder in your area
17. Confirmation of funding – the confirmation on the disbursement of loan proceeds as authorized by the lender
18. After all of that, Congratulations you are now a homeowner!