Are you looking to buy your very first home? Not sure where to begin during this process? You’ll be happy to know that you’re not alone! It’s important that you’re prepared before starting the home-buying process and that you feel confident about the decisions you’re making. A qualified home buying class can be a perfect way to learn all of the first-time home buying basics and help you be prepared for your big financial decision. A recent article by The Huffington Post, explains the few major topics that a thorough home buying class should cover in its course.
Most Americans don’t seem to know there’s help out there. In an earlier 2013 study, NeighborWorks noted that nearly three quarters of Americans had no idea about federal or state down payment assistance or related programs to help people understand homebuying.
Here are some of the major topics a thorough homebuying class should cover:
1. Homebuying readiness. Explore the general questions around a homebuying decision, such as why you want to settle in a particular area, how long you plan to stay, what kind of property you’re considering and where you are in your career and lifestyle. You may also be asked to answer specific financial questions to support your thinking, which should not be shared with others. The best courses will help you determine answers to the big questions, such as whether you should buy a home or stick with renting.
2. Budgeting and credit. These courses will help you evaluate how you handle money. Do you have a budget? If not, do you know how to create one? Do you understand your credit rating and what goes into determining your score? If you have debt, how are your efforts going to pay it off? Essentially, what you don’t know about spending and borrowing can limit your ability to buy a home.
3. Preapproval for mortgage financing. Navigate the nitty-gritty of the loan process – what a mortgage is, the various types of mortgages, how they work and what it takes to be preapproved for a mortgage. Preapproval involves filling out a full mortgage application, typically with a fee to cover an extensive credit check as if you were actually buying a home. Pre-approval, unlike prequalification, allows a potential borrower to receive a loan commitment for a specific amount, which can grease the wheels in a potential purchase and focus the search on properties in the right price range.
4. Knowing what you can afford. Analyze the above and consider the reality of what kind of property you can really afford to buy. Look at price limits and locations and ways to get more for your money, including specific local, state and federal borrowing programs you may qualify for. Buying your dream home can seem nice, but it can turn into a nightmare if you can’t afford the home while living within your means.
5. Your home search. Determine how, when and where to shop for specific properties within the neighborhoods you are interested in and how to get the best overall deal for what you’re buying.
6. What you’ll need to close a home sale in your chosen community. Buying a home can also include an introduction to the specific regulatory and cost environment where you’re planning to live. For example, your course should take you through such things as community-specific housing laws and zoning restrictions that could affect what you’ll be investing in the property, property tax issues (particularly if an assessment is pending), your home titling process, inspection requirements and the other costs linked to legal processes and paperwork.
7. The aftermath. A solid homebuying class should give you a wide picture of the costs you’ll face after the sale and how to manage them so you don’t put the rest of your finances in jeopardy. Being too “house poor” not only puts you at a risk of losing the property, it can threaten other important financial goals.
[Read the full article: Homebuyer Education: The First Step to Buying a Home]
