Mar

First Time Home Buyer Guide, Step #1 - Finances and Resources

For those seasoned buyers out there, you might not need to read this post. However, for those first time home buyers out there, read on. I have written a step-by-step guide to buying a home that I hope will help you in this exciting, if not a bit intimidating, process. The guide will be split into several posts for ease of reading. Topics to be covered will include choosing a mortgage, choosing a Real Estate Agent, searching for a home, the offer process, and information about appraisals and closings.

So, without further adieu, let’s get started!

House made of money

Step #1 - Get Your Financial House in Order and Investigate Resources

This is such an important first step to buying a home. With our recent mortgage crisis still affecting us, it is more important than ever to be on top of your finances when buying a home. Some legwork and planning is required on your part:

Obtain a free annual credit report at www.freecreditreport.com. Check the reports for any incorrect information and contact the credit reporting agency to clear up any unresolved items such as charge-offs or defaulted student loans. Knowing what your credit report says beforehand will go a long way in preparing you to buy a house.
Eliminate your debt Hold off on major purchases - no automobiles, no boats, no nuthin’ - not even major purchases on your credit cards. Period.
Get an idea of what you can afford There are online calculators to help you do this. Here is one from Yahoo! Real Esate.
Save some money for a down payment 10% is good, 20% is better. This may take some time and diligence on your part and may mean giving up a few nights on the town to make it happen. These are they days when lenders want to see that you are willing to take some of the financial risk of home ownership. Get Rich Slowly, a local Portland blog, has a great post on the best high yield savings accounts to help you grow your down payment a little faster.
Check into home buying programs that assist first time buyers. Many offer classes that help you better understand the home buying process and some offer financial assistance. Here are some Oregon programs that I have found: