1st Time Home Buyer - Steps to prepare to purchase

Let me start by saying whatever you do, DO NOT go out and buy a new car or open any new credit cards before you purchase a home! Every time your credit report is ran it dings your overall credit score. The goal is to keep it as high as possible or improve it before you get pre-approved with a lender.

Start by going to annualcreditreport.com and request free credit reports from all three credit reporting bureaus: TransUnion, Equifax and Experian. For a small fee, you can also get your credit score. Check the reports thoroughly for any errors that need correcting and any negative information. These reports should also indicate what you can do to improve your credit. A higher credit score makes it easier to qualify for the lowest interest rates, which in turn make your purchase more affordable.

Start saving and find ways to earn extra cash. You'll need cash reserves to buy a home, and you will need to prove to a lender that you can afford housing payments that may be higher than what you're currently paying in rent. Consider taking drastic steps to cut spending. Hold back on that daily Starbuck's run and pack your lunch to take to work daily. You will survive I promise! If you really want to get crazy, take on a part-time job in the evenings and weekends to earn extra cash.

Consult a lender to investigate down payment assistance programs in your area that may help you find down payment money or low-interest loans. Rates are currently running around 3.75% for a 30-Year Fixed Rate and can change daily. Discuss the pre-approval process with the lender and he/she can make suggestions on ways to improve your credit score if it isn't already at the level you need it to be.

Attend a seminar or take classes on buying a home. Many local government and nonprofit agencies offer classes that can help you prepare for the financial responsibility of owning a home. Selecting a real estate professional will also be key in this process. He or she will be able to help guide you through the process and make sure you feel comfortable with the entire transaction.

Decide how much you want to spend. The bank will be able to tell you an approved loan amount, but remember you don't have to select a home that is that price. Run the numbers to determine how much your monthly mortgage would be to factor in taxes & insurance every month. You may decide that you need to buy groceries every month and don't want to over extend your spending on your mortgage.

Visit open houses in the area of choice to get a true feel for what's happening in the market. Avoid going to homes that you know you can't afford, because it's very easy to fall in love and try to talk yourself into something that's a bad idea financially.

Interview REALTORS and ask around to find out who you might enjoy working with in the area. It's always a good idea to choice someone who is local to the area of choice and someone that you feel you can trust to have your best interests in mind. Remember that two is always better than one with us and we would love to help you find your first home. We remember what it was like buying for the first time and how nervous we were at the time. It's our job to make your life easier!

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