The process of buying your first home can be very stressful and confusing, but it does not have to be! Being informed about the process can make a world of difference in your experience and help you make knowledgeable decisions along the way. Here are a few tips to get your started in the right direction.

Step 1
First and foremost you need to be free of significant debt. Buying and maintaining a home can be costly, and if you cannot afford to pay off your credit card debt, you do not need to consider buying a home. Having stabilized monthly payments on a loan is one thing, but owing a large amount of money in high-interest debt is another. Many people make the mistake of saving up money for a down-payment on a home while making very small payments on credit card debt. Credit card debt should be paid off first, even if it means that the down-payment on your home is smaller. Why? First of all, the average interest rate on credit card debt is over twice that of a typical 30 year mortgage. This means that you will be paying more for longer, if you are only making the minimum payments. Second, if you have excessive credit card debt, it will limit your ability to get a good mortgage; creditors expect a 40% debt to income ratio.
http://homebuying.about.com/cs/mortgagearticles/a/debt_to_income.htm)

This means that no more than 40% of your monthly income can go to paying off debt â€" including mortgages, car loans, and credit card debt.

Second find out how much you can afford to spend on a home. You can find many online resources to help you do this, based on your income versus monthly expenses. One such calculator can be found here

http://www.ginniemae.gov/2_prequal/intro_questions.asp?Section=YPTH

Many people make their mistakes in this area. Either they over-estimate how much they can spend, and end up having to sell their new home because they cannot afford it. Or perhaps they find their “perfect� home and even though it is at the top of their price range, they purchase it anyway, only to end up with a great new house, but no money for furniture.

Step 2
Next you must decide if you wish to go through the buying process on your own or if you wish to get the help of a real estate agent. http://www.dcu.org/streetwise/homes/agent.html

If you forsee buying a for-sale-by-owner home, you could go through the process without any professional assistance. But if you forsee buying a home that is listed with a realtor, then having one to represent you is a very good investment. For example, if you see a home that you like and it is listed by a realtor, then the person selling that house has signed a contract to have that realtor represent them. This representation entitles them to suggested market prices, setups for inspection reports and appraisals, as well as advertising and marketing this house and getting the best price when it sells. Basically, they have a coach in their corner, and you don’t want to get into the game without one in yours! If you sign with a realtor, you pay them at closing, which means that their payment is added into your loan; it does not come out of pocket. They area knowledgeable about the real estate market in your area, and can help you get the most for your money, and invest in a good location and well-built home. Imagine going into this process with no one to advise you and help you make the best, most cost-effective choices; getting a realtor may cost you a little at closing, but it will save you money in the long run.

Step 3
The next step is shopping for your loan. Talk to several lenders to find out which one offers the lowest interest rates and costs. These will vary according to area and current interest rates, but if you spend a little time interviewing loan officers from different companies you will come out ahead. http://finance.yahoo.com/loan/mortgage/overview

Be sure to stop by typical banks (like Wachovia, First Federal, etc) as well as local mortgage offices in your area; often one can get you a lower interest rate than the other. Also, be aware of programs for first time home buyers like FHA loans. These loans typically have lower interest rates and require less of a down-payment than others. And if you have a real estate agent, often they will have a bank or loan officer that they recommend to help you get started. You are not required to use this person, but they may give you a good place to start! Getting pre-qualified for a home loan is one of the best steps you can take once you find a good loan with a good company. This can often be done in the same day, and is very helpful in getting an offer accepted on the home you like!

Step 4
Now, the hardest process for first time home buyers is actually finding a home! The Department of Housing and Urban Development has some great checklists and tips that can help you narrow down your wants and needs in a house. http://www.hud.gov/buying/index.cfm#homeOne of the biggest mistakes that new buyers make is holding out for the “perfect� home. People’s task and wishes vary so widely that chances are, you will not find a home that meets all of your expectations. You have to prioritize what is most important: big bedrooms? Updated kitchen? Nice backyard? Great neighborhood? There is a wide variety of things you must consider, so you must decide what is most important, and be willing to compromise a little. Also, be aware of the status of the real estate market in your area. In some areas homes will be selling fast but in others the market will be slow; you must be willing to deal with whatever the current market has to offer. In many places, right now it is definitely a “buyers market� meaning that there are a lot of homes on the market, but few buyers and low interest rates. This results in better contract negotiations, lower prices and fast closing times.

During the searching process, you have to be aware of certain hazards that can exist, particularly in older or not well-kept homes. Lead-based paint, termites, infestation, wood rot, foundation damage, water-line problems, and wiring issues are just a few of the problems you have to watch out for. Making an offer on a house containing serious problems will slow down your process and could cost you finding another great home. This site contains a lot of great information on various hazards and local offices to help you with detection and avoidance.

Step 5
After choosing a home, you (and your real estate agent if you have one) will write up an offer on the house. http://tms.ecol.net/realestate/offer.htm
If this offer is accepted, then you will set a closing date, but often the sellers will present a counter-offer. The process of writing this offer is when you really see the benefit of having a good real estate agent who knows the legal process and is knowledgeable on the correct terminology to use in writing a firm contract. This contract can include anything from negotiations on closing costs, the price of the home, home repairs, termite bonds, warranties, and anything in between. http://tms.ecol.net/realestate/art_negt2.htm Before closing you should always have an inspection done; some people choose to waive this right, but smart home buyers should never do this! An inspection may cost you a few hundred dollars, but think of the trouble and money it will save you if it finds something wrong with the house. Good inspectors look a house over very thoroughly and look for problems from bad water drainage to unleveled doors. Not only that, it is extremely common, and pretty much market standard, to make a contract contingent on a satisfactory inspection. This means that if your offer is accepted, but your inspector finds any problem with the house, you have the legal right to retract your offer.

Step 6
After a contract is accepted you will go to closing. http://tms.ecol.net/realestate/closing.htm
This typically takes about an hour, and consists of buyer and seller signing final papers, getting copies of everything, and of course, finalization of payment. If you have a real estate agent, they will be there to make sure that your rights are honored and everything is properly taken care of. If you are on your own however, make sure that you know your rights and definitely get copies of everything before you leave.

The process of buying your first home can be a bit scary and confusing, but your best ally is being informed! Research your area, look at homes on the market, investigate loan programs, keep up with interest rates, and talk to your friends and family about good places to live in your vicinity. A little knowledge can go a long way in helping you become a homeowner.

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