The American dream of home ownership is a real possibility for everyone. But for too many people, the dream of home ownership remains just that – a dream, and the reality of owning their own home never seems to materialize. The process of buying a home can seem complicated. But with a little bit of learning and a lot of planning, one should be able to hold the keys to their own home. While there are several books and websites that can help cut through the clutter of the mortgage maze, these nine steps from HUD.gov explain the home buying process in a nutshell.
1. Figure out how much you can afford
2. Know your rights
3. Shop for a loan
4. Learn about home buying programs
5. Shop for a home
6. Make an offer
7. Get a home inspection
8. Shop for homeowners insurance
9. Sign papers
Before shopping for a home, some of the key elements to decide are budget, type of home, location, availability of down payment funds, type and length of loan, schooling district, taxes, insurance and other expenses.
In 1934, the U.S. Department of Housing and Urban Development (HUD) was created to ensure that home ownership becomes easier and affordable for everyone. Since then, the HUD’s Federal Housing Administration (FHA) has helped millions of Americans unlock the door of homeownership.
According to the FHA, most people can afford to budget 29% of their gross monthly income to housing expenses, depending on total debt. Buyers with no debt can budget as much as 41% of monthly income to housing. Determining affordability must be the starting point for every home buyer. This can be quickly and accurately accomplished by utilizing one of free mortgage payment calculators that are available on many real estate websites. These calculators can provide realistic monthly principal and interest payments based on income, debt, down payment, interest rate, length of loan and a home’s selling price.
Buying a HUD-owned home can be one of the easiest paths to home ownership for first time buyers. HUD owns homes in many communities throughout the U.S., and it offers attractive and economical terms. There are no negotiations between the buyer and seller when you buy a HUD Home. This can be a real advantage. There’s no haggling about price–everything is spelled out in black and white. What’s more, your offer is responded to promptly, and if it’s accepted, closing on the home usually will occur within 30-60 days.
Many real estate brokers are happy to sell HUD Homes. All you need to do is to call a few brokers who work in the area you’re interested in and find someone that’s willing and experienced. Some brokers specifically advertise their desire to sell HUD Homes in the real estate sections of newspapers.
In most instances, agents get their sales commission from the home seller and not the buyer. When you buy a HUD Home, HUD will pay the broker’s commission.
There are many other ways and paths for home ownership besides HUD owned homes. Here are a few resources which can be used as guides:
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