Important Advice for First-Time Homebuyers

If you are considering buying your first home, it's an exciting time for you! Home ownership has long been the American dream. But buying a home is an intricate and sometimes confusing process. Fortunately, there are a few simple steps you can undertake that will ensure that the process is as seamless as possible.

• Get your (financial) house in order. Before you even begin your home search, make sure you check your credit scores on an online credit reporting site. Tackle any points of dispute and make sure your credit looks attractive to potential lenders. Then collect appropriate financial documents, including retroactive tax forms, bank statements, and pay stubs to submit to your lender. If you can secure preapproval for a mortgage before you start shopping for your dream home, all the better!

• Do your math! There's no sense playing a guessing game when it comes to what your mortgage payment will be. Use an online mortgage calculator to help you determine whether you can comfortably afford your monthly payments. Be sure to factor in taxes for your area and homeowner's insurance; tax information is available online on sites like Zillow, and a local insurance agent can help you estimate what kind of insurance costs you can expect. Most lenders recommend that your housing payments exceed no more than 30% of your total income – or you might find yourself with a home – but little else.

• Do your research! Knowledge is power. By taking the time to check up on comparable home values in the area you wish to buy (known as "comps"), you'll know whether the home you are considering is priced fairly. You can find out this sort of information on websites like Zillow and through the multiple listing service (MLS) database.

• Plan for upfront costs. Your mortgage payment, taxes, and insurance are ongoing, but don't forget to factor in the costs you will pay when you close your sale. Many fees contribute to closing costs; estimates by state are available online.

• Consult a Realtor. Check around with trusted friends and local resources and get a recommendation for a reputable Realtor who can guide you through your first-time buying experience. Ask your Realtor about the current market climate and recent and expected sales for the area in which you wish to buy. The expertise of a trusted Realtor can be your greatest asset.

• Don't lose sight of the grand scheme of things. Are you investing wisely? Sure, home ownership is a way to build your wealth, but only if you're prepared for all sorts of unforeseen expenses that an crop up when you own a home. If you don't have an ample reserve to handle any contingencies that arise, you could be struggling to make that wealth worthwhile. Make sure your income and savings can accommodate the unpredictable elements of home ownership.

Buying your first home may seem daunting at first glance, but if circumstances are right for you to buy, it can be one of the most rewarding moves you'll ever make. So take a few preliminary steps to ensure that your home buying experience will proceed smoothly and start searching for the home of your dreams!