Homeownership Readiness Quiz

1. I am sure that I want to purchase a house.

12. I have taken a homeownership course.

I am sure I want to purchase a house.
Purchasing a home is one of the most exciting experiences of modern society; however, it is not a decision to be made lightly. You will want to weigh your decision carefully by continuing on.

I have a steady income and stable employment.
If you have erratic income or your employment is in jeopardy, carefully consider the impact homeownership will have on your finances. The last thing you want to do is purchase your dream home, only to be faced with the nightmare of foreclosure.

I plan to remain in the same geographic location for the next year or two.
Are you eying jobs that may require you to relocate? If so, you may wish to place homeownership on hold.

I currently maintain a budget or spending plan.
A budget or spending plan is the most important part of your financial life. Budgeting verifies that your income is put to its best use.

I have created a budget or spending plan based upon homeownership.
Your spending will change drastically once you become a homeowner. Not only will you have a mortgage to pay, but you will also have increased utility bills, property taxes, and payments for services such as garbage removal and water. You will want to develop a theoretical budget to make sure you can afford everything.

I have maintained on-time bill payments for the last twelve to twenty-four months.
Payment history makes up 35% of your credit score. Lenders typically look at your last twenty-four months of payments and pay close attention to the last twelve when deciding to lend to you.

My existing debt is low enough so that it will not limit my ability to qualify for a mortgage.
Another major aspect of your credit score is the amount of money you owe. Too much debt can impact your ability to borrow and the interest rate you may be charged.

I have reviewed each of my three credit reports (TransUnion, Experian, Equifax) within the last year.
Nearly 70% of credit reports contain errors; chances are yours may be one of them. Be sure to review your reports and address any errors.

I have enough money saved to cover closing costs.
Closing costs generally range from 2% to 3% of your loan amount. These costs include fees for origination, points, application, credit reports, and appraisal. You’ll be provided with an estimate of your closing costs soon after your application has been received. For a Typical Closing Cost Chart, go to www.firsttimehomebuyermagazine.com.
 
I have researched the benefits of existing first-time home buying programs in my state.
Many states have programs that promote homeownership that can help you with your down payment and secure a favorable interest rate, among other helpful incentives.

I have researched how much homes are selling for within my chosen community.
The last thing you want to do is overpay for a home. Do your homework to be sure that the seller’s asking price is fair.

I have taken a homeownership course.
There are many aspects to purchasing a home, and the more you know, the better. Attending a free community course can offer you a wealth of information and put you in contact with professionals who will help you throughout the homeownership process.

Score Chart

0-4
You should reevaluate your homeownership goals. Plan to refine your budget and strengthen your credit profile. Contact a consumer credit counselor or a nonprofit agency that offers assistance in getting back on track.  For a listing of agencies, see the information directory in the back of this publication.

5-8
You are on your way to homeownership. You should address any areas of the quiz where you answered No to ensure you are in the best position possible.

9-12
Congratulations! Now is the time to become pre-approved for a loan and start picking out furniture for your new home.

Copyright ©2007 First-Time HomeBuyer Magazine