Homeoperty: Homeownership- Be Prepared!

I have seen it all too often- a happy young couple excited to buy their first home, and then...the disappointment. Their excitement is shattered by the realization that their credit is not what they thought it was, they do not have enough of a down payment, or something hinders them for getting that coveted mortgage. They will have to wait a little longer and start some major repairs on their finances. Want to avoid the heartache? With a little investigating and preparation you can put yourself in good shape to buy a home if you are ready and willing to do your homework. Try to follow these guidelines up to 1 year in advance of making that purchase.

Take a look a your credit reports-

Errors on your reports can force you to pay a higher interest rate on your mortgage or even torpedo your chances of getting a loan. You can get free copies of your reports from the three major credit bureaus, Equifax, Experian and Transunion.

Try to improve your credit scores -

Your credit scores, which are three-digit numbers used to decide your creditworthiness, help mortgage companies determine the rates and terms you can get for a loan. There are hundreds of different credit-scoring formulas, but the one used by the vast majority of mortgage lenders is the FICO.

Pay down some debt-

Don't rush to pay off your student loans, auto loans or other generally low-rate debt before getting a mortgage. What you want pay down is credit-card balances and any other "revolving" debt. These are signs you're living beyond your means. If you don't get your overspending problem fixed before you buy a home, your problems likely will get worse because home ownership typically involves plenty of big costs (property taxes, insurance, maintenance, repairs, improvements, decorating). Get your act together before you house shop!

Save as much as possible-

Stop eating out. Drop your cable-TV subscription. Do everything you can think of to put as much money aside as possible, using your dream of home ownership as motivation. The more of a down payment you can save for, the more financing options you will have. Beyond that, try an put some aside for the first few mortgage payments.

With a little dedication and self-discipline you will be on that path toward home ownership in no time!