Prepare yourself to be a First Time Buyer

So you've made the decision to acquire your first home and with any luck the government is going to help with a nice tax credit for the effort. To ensure this is a successful endeavor there are a number of things you can do to help your cause. This is true whether you are a real first time buyer one that fits into the moniker qualifying for the Federal Tax Credit. Here's some things you should start working on as soon as possible or a minimum of six months before you plan on buying a home.

The first and best thing you can do for yourself is to not apply for any credit until you have successfully purchased your home. No cars, no furs, no computers, etc... no luxury items that would require opening a new account with a new creditor.

Next you should pay any and all Collection Accounts followed by reducing the debt that you have amassed as much as you can. After the Collection Account payoffs, payoff or paydown those credit cards starting with the cards that carry the highest interest rate. Checking with your tax preparer will usually confirm that none of this debt or the corresponding interest is tax deductible. If you have money in the bank discuss paying this debt off with your tax preparer. The same goes for any and all consumer debt, car loans, personal loans, student loans.....Pay them off as quickly as you are able.

This is something that a lot of home buyers don't do because they want to use all their available cash for a down payment. What people don't know is that if they have too much debt, they might not even qualify for a loan to purchase their dream home, or the interest rate offered could be increased as their qualifying ratios (debt/income) don't fit into the undewriting guidelines set by the Lenders of 2009.

Next vehicle to help your cause is the credit scoring. Do you know what your scores are? It pays to know what the credit world thinks of your ability to repay debt. This is evidenced by the scoring the three major credit companies assign to you. You should check your credit and scoring by getting yourself pre-qualified with a Real Estate Mortgage professional. Some prefer to work with a specific bank but a Mortgage Broker provides you an opportunity to capture the best rate and terms available in the marketplace on any given date. Read the report carefully and dispute any inaccuracies right away. This is your chance to correct any inconsistencies/errors that have occured over time plus you might have attempted to correct items earlier only to find that the reporting entity never followed through.This takes time to fix.

Being aware of and following through on the above referenced tips is going to afford you the best opportunity to survive the biggest decision and life changing action you will ever encounter. Give yourself the best chance and don't worry about missing out on a deal or low prices, etc... It is what it is and foreclosures, bank owned homes, short sales, and other distressed properties will be with us for a number of years. There may be signs that we are coming out of the economic tailspin we are in but don't think you have to rush into anything. Do it once and do it right giving yourself the best chance and the best deal on your Dream Home. Keep the faith!