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Purchasing your first home can be an exciting yet time consuming process. Being prepared will help make it a smoother transition. There are important things to know before purchasing your first home.
How do I know what type of home I can afford?
When you first decide to purchase a home, you should know how you are going to finance the home and how much you can afford to spend. If you are going to borrow money from a lending institution you should have an idea as to how much you will be able to borrow to purchase a home that fits your income range.
The attached simple calculator can give you an idea as to what kind of mortgage you will need and can afford.
 BNY Mortgage calculator
Depending on how much you can afford, your home ownership will either be characterized as market rate or affordable.
Market Rate - Open market housing that has no income restrictions. There is usually no lottery and residences are sold on a first come served basis.
Affordable - Restricted income housing that has income limitations. Currently the income maximum for affordable housing is approximately $157,000. However, each individual development may have different income limitations. Typically there is some type of application or lottery system involved in this type of home ownership.
How do I find affordable housing and how do I apply?
- Look for advertisements in newspapers that typically place ads for new developments. New developments MUST advertise in local community papers. So, if you are seeking home ownership in a particular area, look for ads about new developments in the local papers.
- Attend informational sessions held by developers, churches, or other community organizations that will provide you with information on the upcoming developments and their application process.
- Frequent and familiarize yourself with the neighborhood in which you want to live and identify new development sites in that area. Quite often, the application process is taking place simultaneously with the construction process. Inquire as soon as construction begins. Typically with affordable home ownership, the homes are sold before the building process is complete.
- Read the entire application and informational materials upon receipt. Many of the affordable home ownership opportunities are sold via a lottery system. When receiving an application, it is very important to FOLLOW THE APPLICATION INSTRUCTIONS AND MAKE SURE TO MEET DEADLINES. For example, if the application states to only send in one application per household then you must do just that or you will be disqualified. Also, if the postmark date is specified make sure to submit your application even before that date to ensure you do not miss the deadline.
- Apply to multiple developments to increase your chances of being selected as a lottery candidate for one or more of the developments.
Carole’s Top 3 Home Ownership Purchasing Tips:
- Maintain Good Credit
Having good credit is essential to being able to qualify to purchase a home. Lenders want to feel comfortable that you will be able to repay any debt undertaken.
*If you do not have good credit, seek repair immediately.
- Know How Much You Can Afford
Being knowledgeable about how much you can afford is important so that you can have a focused home search, especially when working with a broker/selling agent. Make sure you know how much you are eligible to borrow by obtaining a pre-qualification from an accredited lender.
BNY Mortgage calculator
- Do Your Research
Searching for the perfect home can be fun yet time consuming. It is highly recommended to do your research ahead of time to determine which area you would like to live. Your priorities regarding where you choose to live might be affected depending on where you work (transportation), if you have kids (schools), or how social you are (entertainment, shopping).
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