Preparing for the Home Buying Process

There are many tips available pertaining to how to buy a new home; the advice, when used can make the process of buying a home easier on the potential homebuyer.  There are many things to consider when it comes time to buy a new home, and adhering to the common and best home buying advice will ensure that the home owner avoids the typical hassles and pitfalls that one can come across when it comes time to buy a new home. 


How to Buy a New Home: Cost and Finance

One of the most important considerations tackled by the experts offering advice about how to buy a first home pertains to the cost of the home and financing options.  A potential home buyer must first sit down and establish a personal budget and give full consideration to how much he or she has to pay on a house each month.  When learning how to buy a home, many experts will tell the novice homebuyer to examine debt ratios before buying.  In order to examine debt ratios, the potential homebuyer needs to take a close look at the income he or she is drawing in, particularly the gross income amount. 

Potential home lenders will base front end ratio calculations on a homebuyer’s gross monthly income before taxes.  Say for example, the current front end ratio that a lender uses is 30 percent of one’s gross monthly income.  If the potential homebuyer brings in about $5000.00 each month, the front end ratio would equate to $1500.00 a month.  However, that does not mean that the homebuyer has to spend that much on a home, it just means that it is a calculation that lenders will come up with as a reasonable rate of affordability for the home buyer looking to buy a first time home.

Lenders also take into consideration what is called back end ratios, which includes the house payment one will be required to make monthly plus repeating bills like utilities, insurance, food, and the like.  The percentage for the back end ratio calculations that lenders use is right around 40 percent or more of one’s gross monthly earnings.  Thus, using the above earnings figure of 5000.00 per month, one’s back end ratio would be $2000.00 a month.  Why are these calculations so important?  For the home buyer learning how to buy a home or learning how to buy a first home, the latter ratios will help the consumer figure out and establish a budget that is feasible and workable.  Take a look at the below calculations:

$5000.00 Total monthly earnings:

1. $1500.00 house payment
2. 2000.00 in recurring bills

= $1500.00 remaining for each month.

While the figures above are a bit rough, they give the homeowner a general idea about what one can and cannot afford when it comes time to buy a new home.  A new homebuyer should also consider that all the above calculations are based on gross income, not net income and such a factor is important.  A debt to ratio calculator can help a new home buyer figure out a budget; visit Bankrate.com® for more information:
http://www.bankrate.com/brm/calc/ratio-debt-calculator.asp


More How to Buy A Home Advice

After an individual has determined what he or she can afford, there are still a number of steps one should take when buying a home.  An individual needs to know where he or she wants to purchase a home, and once he or she has decided on a location, extensive home research should begin.  The potential home buyer may want to look at available homes online, visit the neighborhood where potential homes are located, and talk to people in the neighborhood to see what the neighborhood is like.  Once several nice homes are identified, the home buyer may want to view each home more than a single time – this gives the homebuyer a real chance to get a feel for the homes he or she is considering.

A home buyer will want to work with a real estate agent, who knows much about how to buy a first home or a new home.  Real estate agents can help the home owner find homes in the neighborhoods that the buyer is interested in and can inform the buyer about the various neighborhoods under consideration.  Still, the home buyer should conduct research on their own, to lend further support to the information provided by the real estate agents hired to assist in the home buying process.  Finally, once a home has been selected, if the potential buyer has not been preapproved for a home loan, which can speed up the process of buying a new home, he or she will have to apply for appropriate financing options.

For a complete directory of available real estate agents in both America and Canada, potential homebuyers can visit, Real-Estate-Agents.com, for detailed information about real estate agency listings.  Information is accessible at the following website and accessible via state by state categories:
http://real-estate-agents.com/