I am wanting to buy a house and stop renting. I am 20 years old and have a steady, good paying job and a wife. What are my first steps?

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  • 3 years ago
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    Buying a house is a step by step process, this is the first step you should take in order to purchase a house is to be pre-approved for a mortgage loan, by contacting a local mortgage lender. The rest of the steps will fall in place, no matter the type of property you are purchasing.

    In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage lender, you can find one in your local telephone book.

    Make sure this mortgage lender or mortgage banker is able to do government loans such as USDA, FHA and VA loans if you qualify for one. With a VA mortgage loan you are not required to have a down payment, this will save you on closing cost.

    He will fill assist you in the filing out of the mortgage loan application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

    The amount of your monthly debt payments you are required to pay as per your credit report and the amount of your monthly income earned would be used in a formula to determine what is called a debt ratio. This debt ratio would determine the amount a mortgage lender would allow you to borrow to purchase a house. This debt ration should normally not exceed 39%.

    When you speak with the mortgage loan officer you will need the following documents to complete the loan application, there will be others, but this will get you started.

    #1 One month of pay stubs for each person that will be on the mortgage.

    #2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

    #3 Two years of federal income tax along with the W-2 that match.

    Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

    Make sure, before you get your pre-approval letter, you and your mortgage broker go over all your options, as to all the mortgage programs you qualify for, the interest rate, monthly payments. This will allow you to make an intelligent decision.

    Once you have your pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

    If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

    You should select the loan that best suit your financial situation at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

    What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

    So select the best option for you and your financial situation.

    You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

    Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value.

    The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.

    After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

    Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

    The down payment of a house would depend on the mortgage loan program you are approved for.

    There are many and varied programs available to you than just the conventional mortgage loan, as well as the down payment required of each mortgage program.

    #1. Conventional mortgage loan

    Normally 5%-10% down payment.

    A. 20% down If you want to avoid Private Mortgage Insurance (PMI)

    #2.FHA mortgage loan

    Normally 3.5% down payment

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    #3. VA mortgage loan

    There is no down payment

    You must have been in the United States military active duty, veteran, or retired.

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    #4. USDA mortgage

    There is no down payment required

    Normally to be approved for this mortgage loan the property you are purchasing must be a farm or rural property.

    There is a monthly fee akin to PMI that you would be required to pay for the life of the mortgage loan or until you refinance the mortgage loan to a conventional mortgage loan.

    I hope this has been of some benefit to you, good luck

    "FIGHT ON"

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  • Judith
    Lv 7
    3 years ago

    Basically, save so that you have 20% to put down on the house (although not required by all lenders - it is a darn good idea to have 20% down). And you can afford a house which is no more than 3x your yearly income. Your monthly mortgage, insurance and property taxes shouldn't be greater than 3x your monthly income.

    A good investment: A book by Dave Ramsey.

    Another good idea: Slow down. Don't add to your family for awhile. Make goals and Dave Ramsey has good advice. If you think you will move within 5 years, don't buy a house. My niece and her husband bought a house two years ago straight out of college (he got a job at $60K a year right off the bat; she also has a good paying job). Now they plan to move to Alaska from Michigan. They've spent far more on that house then they would have on an apartment (they've done some remodeling) - plus it's just going to plain be a pain in the tush.

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  • 3 years ago

    1) Ask yourself if you're ready to live in the same house for the next ten years. Most young people move around a lot as their family situation, career, and lifestyle changes. A lot happens between 20 and 30 years old, in terms of preferences and lifestyle, so think long and hard about whether planting roots is a good idea for you. Between realtor fees, taxes, filing fees, and origination fees, it takes at least 5 years for the average homeowner to build enough equity just to break even on the sale of a house, so bear that in mind. If you're ready to go through with this...

    2) Do a budget. Income, outflow. Figure out what you can comfortably afford, while budgeting for emergency savings, retirement, and unexpected expenses.

    3) Go to a bank and start the process for a pre-approval to know what you can get approved for, given your financial situation.

    4) Hire a realtor to assist with your search.

    5) Find a house.

    6) Put in an offer.

    7) Sign the sale contract.

    8) Go through closing.

    9) Congrats, you now own a house.

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  • 3 years ago

    You've gotten really good advice concerning the financial aspect of all of this.

    I'm going to tell you that I think you should stop rushing life. You are 20 and already married. Life is going to become more stressful and not more carefree, so put the brakes on for a while and live. Travel, have fun, and experience the world before settling down.

    • Judith
      Lv 7
      3 years agoReport

      Amen. Asker should follow this person's advice.

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  • 3 years ago

    Step 1: Check Your Credit Report & Score. ...

    Step 2: Figure out How Much You Can Afford. ...

    Step 3: Find the Right Lender and Real Estate Agent. ...

    Step 4: Look for the Right Home. ...

    Step 5: Make an Offer on the Home. ...

    Step 6: Get the Right Mortgage for Your Situation. ...

    Step 7: Close on Your Home. ...

    Step 8: Move In!

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  • Ann
    Lv 7
    3 years ago

    Save your money, and build your credit score.

    To buy a house you will need 20% of the purchase price for a downpayment, then another 3-8K for closing costs, home inspection, home owners insurance, maybe mortgage insurance, prepaid oil, gas, water, taxes.

    you should work now to build your credit score by being wise with credit, pay all bills on time, don't have more CC than you need 1 or 2 max, pay off in full each month, in 2 years you should be able to buy a home with comfort

    • ...Show all comments
    • Re Vera
      Lv 7
      3 years agoReport

      You don't need 20%. 10% is more than enough, and FHA loans only need 3.5%. Is it smart to do less than 20%? Not really. But wise != necessary.

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  • 3 years ago

    Do you have savings?

    To buy a property, you'l'l need:

    - a deposit (at least 5-10% of the property value)

    - a good credit rating

    - a mortgage to cover the rest of the property value (you can borrow, generally, 3 x your annual income, although any existing loans / debts will be taken into account)

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  • Bob
    Lv 7
    3 years ago

    save a down payment, build a great credit score, and put away 6 month of your expenses in an emergency fund.. so that you don't lose your house if you lose your job. you use money in the emergency fund to pay your house payment while you look for a new job

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  • 3 years ago

    The first thing you must have is the down payment and the closing costs saved.

    Then you apply for a mortgage. Your monthly income must be 3 times the amount

    of the monthly mortgage payment. You must show pay stubs to prove it.

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  • Judy
    Lv 7
    3 years ago

    See a loan person at your bank about getting pre-qualified. They'll tell you what you need to have and do. You'll need several thousand dollars saved for a down payment and closing costs.

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  • tro
    Lv 7
    3 years ago

    first step, have enough money saved up for a down payment

    next would be to apply for a preapproved mortgage which will indicate the price of the house you should be looking for to buy(maybe not your choice)

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