Make sure you're ready to buy

You've heard the many advertisements about getting off the fence and buying today. I'm a Realtor, we embrace the slogan. While it is a great market with phenomenally low prices and interest rates, those who have heard the call to action need to act in more ways than one.

Many times home buyers watch the market trends, speak to co-workers or others that have recently bought a home and then assume that they are ready for a home purchase because the Jones' did it. On the other hand, there are some who are so afraid of their past spending activity that they never consider home ownership as an option. Before jumping to either conclusion, get all of the information to make an informed decision whether home ownership is the right thing for you right now.

1) Consider your present financial position: Are you comfortable in what you are paying for where you live now? Would additional items like unexpected repairs, lawn maintenance and insurance place you in a crunch. After careful consideration you may feel comfortable taking the next step.

2) Do you have savings for a down payment? While there are programs that offer down payment assistance, regulations and qualifications vary. Even with most down payment assistance programs a buyer will need to have available funds for earnest money and closing costs. Simply hoping that an assistance program will get you in the door may not be enough for you to close on a home.

3) Do you know your credit rating? Lenders are tightening their belts and their standards of qualifications for home buyers. Credit scores less than 620 are not in the game anymore. Many lending institutions want a median credit score of 640 to even be reviewed. Accessing your credit score for free is simple. Consumers are allowed one free report per year and there are various companies that provide credit details and monitoring for a fee. For those who want to learn more about credit reports and how they affect purchasing power, here are two very informative books, "Best Credit: How to Win the Credit Game, 2nd Edition," by Dana A. Neal and "Credit Repair," by Robin Leonard and John Lamb Attorney.

4) Get pre-qualified by a lender. I know it sounds painful, but it has to be done. I can't tell you how many people approach me about buying a home, but are afraid to get qualified to really make it happen. A pre-qualification has a great value to the buyer, the agent and the lender. This process simply helps buyers understand whether or not they are able to buy a home at the time; how much house they can afford; what their interest rate will likely be as a result of their credit rating; and how much money they will need for down payment and closing costs. The worst thing that can happen during a pre-approval process is that the buyer is told that they are not ready to buy a house yet and what steps they can take to become a more able buyer in the future. It saves everyone frustration and disappointment caused from searching for a home and then not being able to purchase it.

Once these initial steps are taken, the buyer is equipped with the necessary information to make their home search a bit easier. For example, the amount of buying power a home buyer has will ultimately determine the location that they are able to afford. And as we all know the three main things in buying a home ... location, location, location! Finding the most ideal location for the determined purchasing dollar is a task that is the next challenge. I'll talk about that in my next post. In the meantime try to determine if you are truly ready for the rewarding title of Home Owner.