Home Buying Basics

If you've ever considered buying your own home then you know it can be an intimidating prospect. When it comes to navigating the unchartered waters of your next home purchase, you should plot your course using these three proven routes to a safe anchorage: sign on with a real estate agent; know the criteria for a home loan application; pre-assemble information for a successful application process. By reading this article you will be ready to enjoy the exciting voyage to home ownership.

Every sailor needs a trustworthy, knowledgeable, willing first-mate; in the realm of home buying, none is better qualified to fill the slot than your local, established Realtor. Your agent will help you define your needs, refine your home budget and guide you through the currents of choosing the right property, knowing real estate values, understanding closing costs and explaining all tax implications. The realtor is a qualified expert at all the details which you cannot expect to know. Your agent will be your advocate in finding, negotiating, financing and completing the purchase of the right home for you and your family. Your agent can also help you understand the criteria for loan applications and streamline your preparations.

Among the many things that lenders consider before making your home loan are your capacity to repay your debt, your credit history, your character and the collateral value of the property. Lenders will review your current debt load, length of employment, total annual income and your future earning potential. They will also thoroughly check your credit history to see how you manage your debt responsibilities. They need to know if you pay your bills on time or are a consistent late-payer; this defines your "financial character". They will also examine your personal history of lawsuits or bankruptcies. Along with evaluating you, the lender will assess the house you want to buy for current and future value. Once you understand this criteria, it will help prepare you to complete any loan applications.

To reach their credit decision, the lender will require you to go through the application process. This will include "loan origination" (doing the actual paper application) and providing any required documents for loan processing. The loan application will be reviewed by a professional loan processor who will determine that it is complete and the information is accurate. The loan processor will gather and verify all the necessary information for review by a loan underwriter. It is the task of underwriters to assess any factors in making your mortgage loan. It is ultimately the underwriter who will decide if your total package is acceptable to the lender.

Now that you know the home buying basics, remember to consider using a realtor from the very beginning, be prepared by knowing the criteria for loan applications and get ahead of the game by gathering all the verified information first; this will speed your loan application through to the underwriter. Now get out there and find your dream home; there has never been a better time to BUY!