Thinking of buying a house? Here's where to start

Home Trends Thinking of buying a house? Here's where to start by Kathryn Vasel @KathrynVasel June 12, 2017: 12:18 PM ET So you're ready to take the leap from renter to homeowner -- but where exactly do you start? Many first-time homebuyers across the country are facing brutally competitive markets that favor sellers. That means buyers need to bring their A game to snag a pad of their own. Especially if you're a newbie. The road to homeownership can be long and daunting, but here's where experts say you should start. Powered by SmartAsset.com SMARTASSET.COM Check your bank balance How much have you saved for a down payment? Nothing? You might want to start there. Lenders usually like to see a 20% down payment before they'll give you a loan. But it's not a requirement. There are also a bunch of low down payment loans available, including government-backed FHA loans that only require a 3.5% down payment. Either way, you're gonna need some cash. So now's the time to start evaluating your spending habits and finding areas to cut back and sock that savings away. Note that anything less than 20% down means you'll pay more every month -- not only will you be borrowing more money, but you'll also likely be charged private mortgage insurance fees on top of your mortgage payments. Smaller down payments also make it tougher to compete in a hot real estate market filled with all-cash buyers who often win out in bidding wars. Know your number Lenders use a three-digit number called a credit score to decide whether to lend you money, so you need to know what yours is before you start house-hunting. The higher your score, the more likely you are to get to get a loan and a lower interest rate. There are three major credit reporting companies, and federal law mandates they each give one free report, once a year. You can check your reports for free here. You can also order your credit score while you review your report, though there could be fees. Many credit card companies offer free credit scores, so check with your bank first. Related: 3 million first-time homebuyers have been shut out of the market Be sure to review the reports carefully and get any mistakes fixed. If your score isn't where you want it to be, start taking steps to fix it. Along with your credit score, lenders also review your debt-to-income ratio (monthly debts divided by monthly income). Many lenders want to see this number no higher than 43%. home buyers guide Check in with your bank House hunting is fun, but it helps to know how much home you can afford before you start looking. If you're not sure, asking the bank what they're willing to lend you is a good place to start. "Too many first-time clients will fall in love with a home before they are qualified and they try to back into it," said Bob McLaughlin, senior vice president and director of mortgage at Bryn Mawr Trust. "Get the qualification first." To get pre-qualified, lenders will take a quick look at your financial picture and come up with a ballpark figure of how much you can afford to borrow. Related: Homebuying secrets from the real estate battlefield Some buyers choose to go one step further and get pre-approved for a loan to help them better compete against other bidders. This review process is more involved and results in an approved loan amount. Be prepared to hand over a stack of paperwork that will likely include at least one month of pay stubs, two years of tax returns and two months of banks statements from all your accounts. Check in with yourself Just because you got approved for a loan, doesn't mean you should spend that much. "On paper you might be able to afford a $2,500 monthly payment," said McLaughlin. "But it might be better to go with what you feel your budget can hold." When figuring out what you can afford, add up your mandatory expenses like student loan and car payments, health care costs, groceries, cell phone and utility bills. But don't forget to factor in the extra money you need for fun things like entertainment, shopping and travel. Getting saddled with a huge mortgage payment can leave you "house poor" -- or unable to spend money on other things you enjoy because you're struggling to afford housing. Start researching Now comes the fun part: house hunting. First start looking at online listings where you want to live to get an idea of what homes cost and figure out what you can expect to get within your budget. Related: Here's how long it takes to save for a down payment It helps to make a list of which features you definitely want the home to have, and which ones would be nice, but aren't deal breakers. Find a trusted adviser Now it's time to get up close and personal with some actual homes. You don't have to have a real estate agent to visit and make offers on a home, but having a professional in your corner can help make navigating the process easier. And since they're usually paid for by the seller's commissions after a sale, you shouldn't have to pay for their services. Experts recommend asking friends and family members to recommend somebody they've worked with personally, and then interviewing them. Happy house hunting! CNNMoney (New York) First published June 12, 2017: 11:27 AM ET

Transitioning Renters to Homeowners

When a HUD-approved housing counselor at ACTS Housing first met Esperanza, she was on her hands and knees scraping old tile off the floor of her new home, debris flying everywhere. In that moment, her housing counselor knew she was a woman on a mission. Esperanza went to ACTS Housing, a HUD-approved housing agency, because she was tired of paying high rental costs. “Half of my check goes to the rent,” said Esperanza. “With three kids, I was ready. I’ve been saving so long and my kids deserve more.” The first step in Esperanza’s homeownership journey was a meeting with Maria Santos, Director of Homebuyer Counseling for ACTS Housing. Maria Santos, pulled Experanza’s credit report, walked her through various housing options, and supported her every step of the way. Maria explained, “Esperanza was a joy to work with. She was passionate and focused on homeownership from day one.” With Maria’s help, Esperanza purchased a property that had been in foreclosure on the South Side of Milwaukee, and renovated it into the home of her dreams. Having worked in the construction trade for five years, Esperanza had the perfect skillset to take on such a big project. She explained, “Once I got the house, the kids were excited because everyone has their own room now. And, I have more money in my pocket.” Esperanza, her three children, their dog and cat are now happy and cozy in their newly renovated South Side home. Maria explains that watching homeowners like Esperanza achieve their home buying dreams makes her job worthwhile. “The most rewarding part of my work is watching families overcome obstacles and move closer to homeownership,” said Maria. “I work with a lot of incredibly strong individuals who work hard to become homeowners. Once the keys are in hand, it makes all the hard work worth it.” ACTS Housing is thankful for Esperanza’s commitment to her family and her home. She has joined a cohort of more than 2,200 ACTS families since 1995 who have done the hard work necessary to become homeowners throughout Milwaukee. Read the latest issue of The Bridge from HUD’s Office of Housing Counseling or subscribe at TheBridge@hud.gov.

Peninsula Clean Energy (PCE)

Enrollment Now Open 7/18/2016 San Carlos has joined with the County and every city in San Mateo County to offer an alternative supplier to PG&E that will provide energy from renewable sources. Follow the link to enroll: http://www.cityofsancarlos.org/news/displaynews.asp?NewsID=1312&TargetID=1

Throw Back Thursday! #tbt

When Palo Alto Was Affordable!

Throw-back Thursday!

Here's an ad from the Spring 1940 addition of "Housing Book of Homes & Plans".  A new home in Palo Alto could be purchased for $75.00 a month! What a difference from today when average home prices are so high!  Does anyone recognize this house?  #thegoodolddays #affordablehousinginPaloAlto #PaloAltoHomesForSale #GreatdealsonPaloAltoHomes