First time buyers "How-To" Guide. (part 1)

Are you confused with the process of buying a home?  Don't be, it is not your fault!  Unfortunately the educational system misses out on teaching us how to buy and what to expect in the process. Heck, many schools do not even teach the basics of a bank account these days! The other problem is that your parents are not necessarily the best source for information.  Things change frequently in the Real Estate world, and you need to find a professional that you can trust.

The First step should take place as soon as you get a job and begin to build credit, long before you buy a home.

The first thing you should do is:

• Get a job.  Sounds simple enough, but you would not believe how many people think they can buy with out one!

Once you have the job:

• PAY YOUR SELF FIRST!  Take a piece of your check and put it into a savings account on a regular basis. Don't try to keep up with your friends spending habits. It will only hurt you in the long run.
• Put your savings in the BANK!   You would be surprised how many people still have a shoebox full of cash.  Be smart, put your money in the bank, it is hard to verify cash, and it makes you look bad when you can not show your savings.

Don't live beyond your means!

• Use your credit cards like cash, with the intent to pay them off at the end of the month Credit card balances Will Lower your credit scores. So never let the balance go above 20% of the limit. (your available credit is about 30% of your credit score) NEVER carry a balance.
• Pay your bills ON TIME: Another simple issue and a common sense one. But many people make that mistake when they are young. If you cant afford it, DON'T buy it!
• Don't buy a new car. A $500 car payment is the equivalent of an $83,000 mortgage. (frugal will help you here, think baby steps, no need to have a Cadillac or a Mercedes right away, you cant live in it!)
• Best way to build credit and a high score will be a few credit cards. My advice is to use them once a month and pay them off the day the bill comes in. That way you will pay $0 interest, and should not have any issue with the balance getting out of hand. Just be cautious of the limit, keep the balance (even if you plan to pay it off) FAR away from the limit.

Think about where you will be comfortable with a monthly payment.  This is important since it is YOU that will have to write out the check every month!  Keep in mind that a home is one of the best investments you can make.  There are significant tax advantages to owning a home that make it much more affordable than renting.  Because of the Tax advantage and other benefits you can actually afford a much higher mortgage payment than rent payment.

As you can see, You can not just wake up and say... "I am going to buy a house"  it is something you need to plan for!