Ten Things The First Time Home Buyer Should Do Now If You Plan On Buying in 2007-2008

The first time home buyer's decision of whether to buy a house in 2007-2008 may seem daunting.  Will prices increase?  Will interest rates rise?  How will the economy fare this year?  The process may seem overwhelming, especially if you’re a first time home buyer.  But many industry experts say the general outlook appears much better than it was.

If a first home is in your 2007-2008 plans, there are things a first time home buyer can do and information you should be armed with to put yourself in the best position possible when the time comes to buy, including: 

1. Check our your credit report.  You don’t want to be shocked if there are inaccuracies in your credit report – or that bad debt you had in college is still on your record.  Potential lenders will view your credit history – how much debt you’ve accrued, how many accounts you have open, whether your payments are made on time, etc., - to determine whether they’ll give you a loan.  You should get a report from each of the three credit reporting companies:  Equifax, Experian and Trans Union.
    

2. Get pre-approved for a loan.  This way you’ll know if you can get approved and how much you can spend on a house.  It also puts you in a stronger position when you ultimately make an offer on a house.
    

3. Be realistic and look at your big financial picture.  Just because a bank approves a first time home buyer for a certain amount, it doesn’t automatically mean you should find a house for that amount.  Factor in other debts and expenses and long, and short-term, savings goals like college for the kids and retirement for you.  And always factor in some reserve savings to put aside each month.
    

4. Determine how much cash you’ll have available for a down payment and closing costs.  (Origination fees, taxes, title insurance, and financing costs).  The higher your down payment, the lower your monthly mortgage payment and the possibility of qualifying for a better loan. The more down payment the first time home buyer has, the better.
    

5. Figure out how much your new bills – utilities, water, insurance, maintenance – and repairs will cost you each month.
    

6. Avoid making any major purchases.  Especially a new vehicle, if you do, you may have a harder time getting a loan – or it could potentially lower the amount you’ll be approved for. This is one of the biggest, most common mistakes that expecting first time home buyers make.
    

7. Keep an eye on interest rates. If they start to creep upward, you may want to make your move.
    

8. Make a budget NOW.  As if you have a mortgage payment and the monthly expenses that come with owning a home.  Put the money (or the difference between it and your current living expenses) into a savings account.  After 6-12 months you’ll know whether you can swing the extra payments – and you’ll have extra money for your down payment.  Keep in mind that owning a home gives you extra tax deductions that can result in additional monthly savings.  A lender or accountant can assist in determining these savings. The first time home buyer wants to be sure about being able to make the payments.
    

9. Gather your paperwork – recent paystubs, tax documents for the past two years, bank account statements, etc.
    

10. Begin thinking about homeowners’ insurance now.  Again, make sure your credit report is accurate – credit histories are sometimes used to determine whether a company will insure you, and if so, at what rate.