Get to Know Your Credit Report. Be aware of any negative items on your credit report and what factors are used to determine your credit score: 35% payment history, 15% Length of History, 30% Amount Owed, 10% New Credit, 10% Type of credit used.
Gather Documentation. Create a file with important documents such as W-2 forms, tax returns, employment, credit history and bank statements.
Be Realistic About What You Can Afford. Purchasing a home is an expensive venture. Do a thorough budget analysis to determine the right amount of home for your situation.
Review your budget and housing options. Consider a range that won’t break your monthly budget. It’s best to start small and over time you can move up.
Research monthly costs and hidden costs. Consider ALL costs when determining what you can afford. Don’t forget to consider utilities, home maintenance, and home owners’ association dues, as well as closing costs, homeowners insurance, and property taxes.
Save for a higher down payment. The more you put down, the less loan you carry. This combined with shopping around for the best interest rates will keep your payment lower and help you build more equity quicker.
Get Preapproved. Once you have a down payment, it’s time to get a preapproval. You should do this before you start shopping for a home so you’ll know what your realistic budget looks like.
Research Neighborhoods. Drive through your desired location at different times to see the neighborhood from different views (day/night, rush hour and/or lazy Sunday mornings).
Bring a Trusted Friend or Family Member to House Hunt. Buying a home can be an emotional purchase. Be sure you are with someone who will help you think through the purchase from all considerations.
Work with the right broker or realtor. Don’t go with the first referral you get. Interview a few professionals to see how they will work with you on your behalf. Find the right professional who will listen and respond to your wants and needs. Always ask about fee negotiation.
Your credit score has nothing to do with your age, race, income, or job title. It is calculated based on your payment history, amount owed, length of history, and the type of credit you have.