Are You Ready To Buy A Home?

Are you waiting out the real estate market, sitting on the sidelines just watching and waiting? Are you trying to figure out when home prices are going to hit bottom and start rising again? What about interest rates? Will they still be at historic lows when the real estate market picks up again? Instead of just waiting, you could be using this time to get ready so that you'll have everything in place when you decide that it's time to make your move. Buying a home is a complicated, time consuming process, full of snags and hurdles, some of which could prevent you from buying. Now is the ideal time to find out what roadblocks you might face and get them out of your way.

Qualifying for the mortgage is by far the most difficult part of buying a home. You can improve your chances of getting a loan when you're ready by doing a few simple things now.

Clean up your credit. Contact the credit reporting agencies and get a copy of your credit report. There are many services that will do this for you - for a fee. However, if you contact the credit reporting agencies directly they'll give you a copy of your credit report for free. Get copies of credit reports for yourself and your spouse, or whoever you're planning to buy a house with.

Look for errors. Write to the credit reporting agency to dispute any incorrect information in the report. They will contact the creditor for a response. Get started now, because this process takes time. It's important to do this with all three credit reporting agencies. You never know which one your mortgage lender is going to use. Some require credit reports from all three.

Make sure you bring all accounts current and make all payments on time. If there is a blemish on your record, it will count for less as it ages. The best thing you can do it to make sure that your history is perfect going forward.

Don't open new accounts and try to decrease the balances of old accounts. Having too many loans can bring down your credit score, even if you always make your payments on time. Wait until after you've bought your home to make any major purchases that require a loan, like a new car. Car loans are much easier to get than home loans.

Think about your employment history. Lenders want to see that you are steadily employed in the same field for at least two years. If you have plans to make any major changes - like switching careers or going into business for yourself - you might want to wait. It's okay to switch from one employer to another, as long as you're working in the same field.

Start saving up to pay for closing costs and a down payment. This step will probably require a chat with a mortgage broker or some online research. Most people want to buy the most house that they can afford. When you find out what kind of payments you can qualify for, then you'll know what price range of house you're looking at. Also, different types of loans require different down payment amounts. If you can get an FHA loan, you may be able to put as little as 3.5% down. Closing costs will run about 3% of the home's purchase price. You may be able to negotiate with the seller of the home to have them pay some or all of your closing costs, especially if you buy a brand new home from the builder.

Saving up money and improving your credit score can take time. Getting started now will put you in the best position possible so that when you think the time is right to buy a home, you'll be able to move quickly.