Gone are the days of 100% financing.  In order to buy your first home you need to financially prepare yourself so when the perfect house comes along you can go after it with some buying power.

Tip #1 – Save money for a down payment and closing costs.

Down payments usually range between 3-20 percent of the property value.  The exact percentage will be determined by the type of mortgage loan.  Closing costs consist of title insurance, taxes, points (if applicable), financing costs, items that must be prepaid prior to settlement and other settlement costs.  Buyers should receive an estimate of these costs either from the lender and/or from the broker.

Tip #2 – Get pre-approved from a lender.

Before you start looking at homes, you need to know how much you can afford.  Call a local lender or ask your Realtor who they recommend you should call to get pre-approved.  Your income, debt and credit history will determine how much you can borrow.

Tip #3 – Verify your credit report.

Request your credit report from each of the three credit reporting companies:  Equifax, Experian and Trans Union.  You will want to make sure the report is accurate and fix anything that is not.  Potential lenders will review your credit history and based on your credit report they will determine whether or not they will grant you a mortgage loan.  Get your credit report in good shape in advance of applying for a mortgage.

Tip #4 – Don’t make any major purchases!

Although you may be tempted to buy a new car, don’t do it right before you want to buy a home.  It may decrease your chances of getting a loan or it could potentially lower the amount of the loan.

Tip #5 – Familarize yourself with the local real estate market.

Start researching the home values in neighborhoods that catch your eye.  Also, you need to educate yourself on the TOTAL cost of home ownership such as homeowner’s insurance, remodeling costs, maintenance costs, utility bills, Home Owner Associations (if applicable), etc.

Home ownership is a wonderful thing and a great investment for your future.   Hiring an experienced real estate professional will also better prepare you for this adventure.  They can guide you through the process and make it a fun and rewarding experience.