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Had it with rentals and roommates and think it's about time you took advantage of low mortgage rates and became a first-time homebuyer? To make that happen, just follow this simple step-by-step plan.
1. Check the selling prices of comparable homes in your area
Do a quick search of actual multiple listing service, or MLS, listings in your area on a number of websites, including the National Association of Realtors.
Use Bankrate's mortgage calculator to get an idea of what your monthly mortgage payments would be if you bought today.
2. Find out what your total monthly housing cost would be
Include taxes and home insurance in your cost. In some areas, what you'll pay for your taxes and insurance escrow can almost double your mortgage payment.
Compare mortgage rates now to find the right loan for you.
To get an idea of what insurance will cost you, pick a property in the area where you want to live and make a call to an insurance agent for an estimate. You won't be obligated to buy the policy, but you'll have a good idea of what you'll pay if you decide to buy. To estimate what you'll pay in taxes, check your property appraiser's website. Just remember that exemptions and the intricacies of local tax law can create differences between what a homeowner is currently paying and what you can expect to pay as a new homeowner.
3. Find out how much you'll likely pay in closing costs
The upfront cost of settling on your home shouldn't be overlooked. Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items like homeowners insurance or homeowners association fees. Check out Bankrate.com's annual closing cost survey to see what closing costs average in your state.
4. Look at your budget and determine how a house fits into it
Fannie Mae recommends that buyers spend no more than 28 percent of their income on housing. Push past 30 percent and you risk becoming house-poor.
5. Talk to reputable Realtors in your area about the real estate climate
Do they believe prices will continue falling or do they think your area has hit bottom or will rise soon?
6. Look at the big picture
While buying a house is a great way to build wealth, maintaining your investment can be labor-intensive and expensive. When unexpected costs for new appliances, roof repairs and plumbing problems crop up, there's no landlord to turn to, and these costs can quickly drain your bank account.