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Some cities have housing developments with special deals where (1) buyers need to have less that a particular income and (2) the city shares in the profit upon resale. This may be worth looking into.
But overall- you need to plan ahead for what your income and expenses will be after you stop working. And you need to estimate when you will stop working.
I'm 57 years old. Single woman, with a middling job. better than minimum wage but not a lot more. I haven't the faintest notion what is necessary to go about buying a home. Where would I start? I appreciate advice but not snarky criticism. With who and what I am, where should I start? I need home buying 101 for a person of modest means. I honestly don't even know where to start. I've rented all my life.
Contact your local HUD agency and see if you qualify for any programs to help first time home buyers. There are often many available for people in your situation.
Also, I have found that realtors are very aware of first time homeowner programs and special incentives. Look for a nice helpful realtor....interview them, get a patient helpful type. Maybe visit a few open houses in your area, and see how the hosting realtor interacts with folks. A helpful realtor is what got me in a home years ago, with a rehab grant to fix things needed.
Don't be scared. You are in the position to make a major purchase...be inquisitive and do your research. Shop around, typically there are ideal homes for your age and needs....Don't be afraid to look at condos or townhomes, which are typically less expensive, with little to no maintenance. You can do this.
I was one of those middle class, single working middle aged woman who wanted to own a home, but had no idea on where to start. I thought you just looked at houses online, pick one out, get financing and move in. On suggestion, I attended one of those first time homebuyer classes, and it was run by a local non profit here in Houston. 8 hour class on a Saturday morning. I was 48 at the time. My first thought was "ugh...an entire SATURDAY in class??" I thought different after the class was over.
That class was one of the most informative, educational experiences i've ever been through. Everyone had a chance to ask detailed questions regarding their circumstances. All forms of financing were explained. I didn't know that looking at houses was one of the LAST things on the list. What a bummer LOL.
They go over how to REALISTICALLY figure out your budget, wants vs. needs when it comes to picking out a home, financing options, saving for that emergency fund, interest rates.....everything OP. I highly suggest attending one of these classes. It will bring the reality of homeownership to light, and, armed with the wealth of information, you will be able to make the decision based on facts pertaining to your situation.
Do it OP, and good luck
The local one that I went to was great, it was in a different county than I licef in before I bought in another area. It was a full day thing held at a local library on a Saturday and you had to sign up for it by phone. We decided to skip lunch and have a 15 minute break instead and got out a little earlier. They had donuts and coffee and juice there too. We had different speakers such as mortgage bankers, insurance agents, real estate agents, housing discrimination and others. Mine was free, the only cost was if you wanted to pick up a certificate that said you completed the class 2 weeks later for $25. I decided to get one because it was good thru the whole state for 2 years I think and some first time home owner grants required the class and proof with the certificate.
I'm 57 years old. Single woman, with a middling job. better than minimum wage but not a lot more. I haven't the faintest notion what is necessary to go about buying a home. Where would I start? I appreciate advice but not snarky criticism. With who and what I am, where should I start? I need home buying 101 for a person of modest means. I honestly don't even know where to start. I've rented all my life.
Also read around online. There are things you will find out such as don't buy a home with cloth wiring nor Polybutylene Pipes used in the plumbing, it will make the home much harder and more expensive to insure.
Also if you always rented your heat may have been included in your rent. If you are buying in a cold area you have to account for that extra expense in the winter
You will also have to pay for water and sewer which is usually included in rent. If you choose and area with well and septic make sure that they are not planning to switch and hit you with a huge assessment to bring the services to each home, that can run in the 10s of thousands of dollars.
Also you will have to take care of a lawn or find a service if you buy a single family home.
Pre-qualify.
If you can't, you're not buying a house- plain simple truth.
If you do, all the other questions can follow.
If you prequalify, shoot for a house that's way cheaper than your limit. I don't think it's too late but there's a simple beauty about renting. Upkeep on homes can be expensive. More so if you don't keep up with it.
1: positive credit report. No liens,judgements,or bankruptcy.
2: 6 to 12 month employment stubs
3: checking and savings statements...stocks..ira
4: your location .
It's the pre tips before even stepping thru a mortgage lender.
It's possible to get a 15 yr loan...do not let your age deter you...
Agree that seminars are one way to educate you on the buying process...
Some though are so heavily bias to certain industry supported goals.... ours had three insurance agents ,two builders and one local zoning rep. The only one that seemed concerned about the buyer was the zoning rep..He clarified some of the first time buyer questions on what could and could not be approved for some rehabbed homes...
A couple of things:
1) take an adult ed class for first-time homebuyers. Buying a home is complicated and can feel overwhelming. You need to be an educated consumer in order not only to better understand the process, but all the different aspects of it such as title, documentation, surveys, escrow, etc.
2) talk to several different real estate agents to get a feel for the different types of agents to see which approach you feel you can work with; nothing against agents at all, but they come in all flavors and you need to do a taste test to see which flavor fits you You need a knowledgeable agent who will work with you to show you homes that fit your needs and budget.
3) ask the agents you talk to for a referral to a mortgage broker, and then go talk to 2-3 mortgage brokers to see what they each feel would be best in your situation.
4) as others have said, once you find a mortgage specialist you want to work with you need to get pre-qualified.
5) realize that on top of your actual principle and interest payment you will also need to pay property taxes, insurance, and all home repairs.
My best personal advice from experience is to buy what you can afford, and don't let anyone try to up-sell you into a higher mortgage or a larger house. All the large banks have mortgage calculators that help you begin to set parameters for how much you can afford. Also, most realtor sites have a mortgage calculator built right into each house's individual online page.
You don't have to buy a typical home with a 30 year mortgage there are other options. For me personally I'm building my own small house under 800 sq. ft but I'm doing most of the work myself. I can build it for under or close to 30k that doesn't include cost of land. Don't let the sheep of society tell you that you only have 2 choices rent or a 30 year mortgage. Think outside of the box there are other ways. You can also buy a modular home, mobile home, cottage, cabin.
If you prequalify, shoot for a house that's way cheaper than your limit. I don't think it's too late but there's a simple beauty about renting. Upkeep on homes can be expensive. More so if you don't keep up with it.
Yep and guess whos rent goes up when those expensive repairs come up? A landlord is not going to simply eat the cost of major repairs like a new roof without raising the rent.
As the above have said, this is a money thing. If you can't get a loan, you can't buy. From that point forward it starts to get murky...
The housing bubble collapse of 2008~9 was caused by shady lending and people falling victim to their own ignorance of what things "cost". Some mortgage lenders (and real estate agents, even on TV) still push the "what can you afford per month" line and that makes me sick because it puts the individual is a VERY bad position if Anything should go wrong. Lose a job, or even just hours of work at the same job and suddenly you can't afford that monthly number. Get hurt, have a sudden expense elsewhere (big car repair bill so you can keep working), and you're in that same boat. Obviously you have to look at that monthly number, but not to the exclusion of the total price.
As for that number, I think lenders will allow somewhere in the 40% of your net income to be consumed by their loan payment today. When I bought my first house, it was in the 33% range (we were told we could "afford" roughly double of what we wanted to spend, closer to triple on our second home purchase). All the old wisdom I've heard from all sorts of sources said to never go above 25%. So, if you're earning $10/hour and working a 40 hour week, your "safe" monthly housing cost is $320, and lenders probably won't allow for much more than $500. I'm sure you're spending more than this currently, but you probably don't contribute to savings, don't have an emergency fund, and are probably living pretty close to the edge ~ could you come up with $2,000 in cash tomorrow without borrowing? More than half the adults in the US can't.
For buying, generally you need to put money down. Again, old wisdom was at Least 20% and that was to keep from having to pay the PMI (mortgage insurance, covers the bank and their investment if you default but it's not cheap and does Nother but take money from you). My current loan allowed for a 10% down to avoid the PMI and I think (but you would need to research) that the USDA first time home buyers program (USDA Zero Down Home Loan Program - Firsthomebuyers) allows for Zero down and no PMI.
Zero down frightens the bejesus outta me. You never get something for nothing in this world, so where are they stacking that loan program? Is it simply rolled into other costs, a higher interest rate? What's the catch. I have some in-laws that are house poor and one Small financial hiccup away from not being able to pay on their brand new house with the above USDA loan, I get the feeling I'm going to hear all about the underbelly of the beast soon. By the way, they fudged every piece of info they could to qualify for their McMansion, right on down to having mom put him back on the family business payroll to bump their income. Don't do that, it's just not worth the Constant stress and inevitable financial ruin that lays ahead.
Anyway, you have a whole lot of self education to do. Use the internet, start reading, take notes, learn the process (by doing for yourself rather than asking random internet strangers ~ do you know what any of our qualifications are? Do any of us know what we're talking about? Do you really want to trust us with such a Major financial decision... no, really!??!) Once you know what to expect, what questions to ask, how to protect yourself, then you can seek out a mortgage broker. I'd actually recommend calling the real estate offices near you (or near where you want to buy) and ask them who they have the least issues with. The "big" banks (wells fargo *shudder*, I won't even sell to someone who uses them, Bank of America, etc...) are all nightmares best avoided. There will be someone Local who won't brush you off, let the paper fall through the cracks, or get the process into an endless cycle of postponement.
That's not even touching on the actual buying process, this is just getting the money lined up.
Well, thanks....I think. I'm trusting anyone with a major decision. You'd be surprised. Sometimes people can just say one wise thing that points you in the right direction. I've read some good ones here already. And....not so good ones too. You say go research it on the internet, but honestly, if you haven't a clue where to start, the internet can be a very big and scary place. Just simple nudges in the right direction can be priceless gems. That's good advice to you.
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