Getting Started as a First Time Home Buyer Dive into the classifieds? Drive around the neighborhoods? What's the best way to start the home buying process? First of all, you may want to do some prep work before you start shopping. These topics can save you lots of legwork and may help you find a home that's right for you and your budget. Your Financial Profile As soon as you've decided you want to buy a house, make certain you have a clear picture of your financial situation. Consider the following steps: Determine how much home you can afford. Analyze how a house purchase will affect your budget. Get a credit report to make sure there are no discrepancies or problems in your credit history. Find out how credit scores work and how you may be able to correct errors in your credit report, if there are any. Do an analysis of where your money comes from and where it goes. Develop a household budget for your current situation. Stick to it. Try not to add on any new debt. Since first time home buyer mortgages are based on debt to income ratios (the amount you pay out monthly versus the amount you bring in) new debt could throw the ratios off and make a previously approved mortgage unobtainable. Estimate Your Expenses You will need a few hours to develop your budget once you've gathered the necessary information. You can print out a budget form for developing your household budget. Take the time to prepare for the many expenses that a new first time homeowner incurs as opposed to renting or leasing. Some items you'll need are: Current monthly loan payments. Other monthly expenses (childcare, dues, etc.). Records of variable expenses from the last 12 months (utilities, food, car repair, etc.). Records of annual or semi-annual expenses (insurance, taxes, etc.). Records of other non-fixed expenses for the last year (medical expenditures, etc.). This will give you an estimate of average expenses of this type. Records or an estimate of personal expenses (entertainment, travel, etc.). Having a current copy of your credit report can be very helpful and may reveal any inaccuracies in your credit history, and may also give you a clear picture of your total debt and your monthly obligations. An estimate of what your new mortgage payment will be. To get this use our mortgage payment calculator. Be realistic, make provisions for possible increases in some items ( school tuition's, insurance, taxes, etc.). Then look for ways to get and keep control over your budget.
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