What is the first step?

The first step to home ownership is getting pre qualified. Before you even start looking for your first home you need to be pre qualified by a reputable lender. There are several reasons to talk to a lender first.

1. You really do need to know what price range you should be looking for. You don't want to waste valuable time looking at properties that are not the right fit for you.

2. You also need to know ahead of time what loan program will work best for you and what kind of payment that means, both now and in the future.

3. When you find the right home, most sellers won't even look at an offer to purchase if you are not pre qualified as an approved buyer for their property.

Some helpful hints;

1. Find a good lender. You want to find someone you can trust to not take advantage of you and to know the business well enough to find the absolutely best program for you and your particular circumstances. You shouldn't have to give anyone any money in order to get pre qualified, if they are asking for an application fee, even though it will go to pay for specific things, you shouldn't need to put out any money just for the pre qualification process. The only reason a lender (whether it's a mortgage broker or a loan originator) will ask for money up front is to buy your loyalty. You really want to allow yourself the option of shopping several different lenders to get the best rate possible once you've found the home your looking for. One place you could go to get pre qualified is through a new home builder (yes I work for one, but that's not why I'm suggesting it). Pick a builder that doesn't necessarily have their own lender, but one that works with multiple lenders. Talk to the on site sales agent about their lenders to see if they can recommend one that might be the best fit for you. You can get pre qualified without paying any money up front and you know that the lender has an established relationship with that builder that they wouldn't jeopardize by not giving you the best deal possible.

2. Now that you've been pre qualified, ask for more than one "pre qual" letter. Say you are qualified to buy a home for up to $225,000 but you really are more comfortable with the payment on a $200,000 home; You might ask for letters that say you are qualified for up to $190,000; $200,000 and $210,000. When you make an offer on a home you want to be qualified, but not too qualified. You want the seller to take you seriously, but if your "over" qualified they may counter back at a higher number.

3. Remember, it shouldn't cost anything to talk to a lender, but you may have to fill out an application in order for them to issue you a "pre qual" letter. If they tell you they need a fee in order to pull your credit, tell them you'll provide them with a copy of your credit report. They will still want (or actually have) to pull it themselves, but they may waive the fee for you. If they say that part of the application fee pays for the appraisal, tell them you'll wait until you have a home under contract to worry about that.

4. If your lender tells you that you can't but a home right now, make sure you've got a good lender who will help you do what ever it takes to become a qualified buyer in the future. Again, this service should not cost money, plenty of lenders are happy to help you take the steps necessary to fix or establish credit so that you can be ready to take advantage of this buyer's market.

5. Last, but not least, there are some people who are "born to rent", but you probably aren't one of them. If you think you are, it shouldn't cost you anything to find out!