1.  Start a down payment fund.

You goal should be to save a 20 percent down payment if you can.  Set up monthly savings goals.  Work more if you have to as the reward will be lower house payments and higher equity when you sell in the future.

If a 20 percent down payment is just not feasible, you can always apply for an Fha loan, which only requires a 3% down payment, plus closing costs, and sometimes the seller will agree to pay some of your closing costs...  Check with a loan professional.

2.  Negotiate for extras.

In our current market this makes sense, unless it is a short sale or REO (bank-owned property).

In a short sale situation, the seller is already in a position of no equity and most likely behind in their house payments, so extras are pretty much out of the question.

If it is an REO, rest assured that the bank is not going to repair or replace anything.  That will be in the contract.

However, if it is a "normal" sale, feel free to negotiate appliances, flat-screen TV's, possibly partially-paid closing costs and prepaid homeowner's association dues.

Do keep in mind, though, that the inventory is diminishing in Paso Robles and other areas in San Luis Obispo County, so if you really want to purchase a particular home, keep in mind that asking for too many extras may cause a seller to choose to accept another offer with less concessions.

3.  Cash is king.

Those with cash are always ahead of the game in a recession; especially since mortgage loan qualification standards have tightened up substantially.

4.  Improve your credit score.

Cleaning up your credit score is more important than ever if you hope to get home financing in 2009.  Pay your bills on time.  Pay down high-interest credit cards if you can.

5.  When purchasing a home, don't overlook neighborhood issues.

When you do qualify for a home mortgage, don't overlook these issues in your search for a new home.  Crime levels, the presence of sex offenders, zoning issues, noise issues, general crime levels and location will impact not only your initial purchase price but your sales price when it is time to sell.

6.  Determine your home-buying budget with a loan professional.

A loan officer can tell you what you can qualify for, but only you know what monthly payment you will be comfortable with.  Be realistic...

7.  Watch for REO's.

REO's can be a great deal, but in Paso Robles, be prepared for multiple offers.  My experience this year is that short sales and REO's are receiving as many as 9 to 12 offers that are reviewed by the bank before one is accepted.

So, if you have your heart set on a particular home that is a short sale or REO, be prepared to offer more than asking and cross your fingers.  Banks not only consider the price offered, but also strength of the borrower as far as job security, down payment and credit scores.

If you would like to search the MLS for listings in San Luis Obispo County, visit my website.  If you have any real estate questions or general questions about Paso Robles or San Luis Obispo County, please contact me via email or call me at (805) 235-0234 for more information.

It starts with a dream...