How to achieve the goal of homeownership

Are you renting right now? Are you a homeowner who is considering the next step up to a bigger house? What is stopping you from purchasing a house in your local real estate market?

If you answered yes to any of the above questions, you are not unlike many Americans today. One of the frequent topics I see on forums and blog posts is, "Is it the right time to buy a house?" I wonder how this question can have one answer on a national level. The truth is, homeownership is an individual goal. The decision to move forward and purchase a house can only be made based on your needs and wants. 

Once you have committed yourself to a goal of homeownership, the next step is to move toward--not away from--your goal. Here are some steps to get you moving toward homeownership:

1. Know where you stand with your credit. In order to get a home loan, you need to be credit-worthy.  Some institutions, like Fannie Mae, will not consider an applicant who has less than a 575 FICO score.  The Fair Credit Reporting Act allows a consumer to obtain a copy of his credit report every 12 months for free. A central website has been set up to allow you to obtain instant access to your credit report online, by filling out a form.

2. Work on becoming loan-worthy. Even though it has become more difficult to obtain a mortgage, it is not out of your reach. Once you have obtained your credit report, you need to review any outstanding or delinquent accounts. Work on bringing those accounts current by making payment arrangements with the companies listed on the report.

If you see an account you don't have, you can dispute it by contacting the individual credit reporting agency in writing. All disputes properly filed have to be investigated within 30 days from the date they are filed. Clearing up discrepancies and working on your credit goes a long way toward your goal of homeownership.

3. Save your money. You may be able to get into a special loan program that will help offset closing costs or contribute toward your downpayment. However, this money is not always available and loan programs change. Your best bet is to start saving money to buy a house. You will want to save enough money for a downpayment; the recommended goal is 20% of the purchase price. You should also save enough money to have a reserve for unforseeable expenses that come with homeownership, such as a leaky roof or a broken washing machine that needs to be replaced.

Also make sure you anticipate for added expenses in your budget. A bigger house normally means higher utility bills. You may also have additional expenses for maintenance, like lawn care or pest prevention.

4. Attend a home buyer's workshop. Many real estate agents hold first-time home buyer workshops. They educate home buyers about the local housing market. Usually a local mortgage representative will be in attendance to discuss issues like becoming credit-worthy and government programs that help with downpayment assistance through grant money. You can usually find these programs advertised in your local newspaper or through your Village or Chamber of Commerce's website.

5. Become knowledgeable about your local market. Start becoming observant about housing prices in your local market. See what's available by researching real estate listings online. Many real estate agents' websites allow you to receive email updates of properties in your area that meet your criteria. 

Don't be afraid to contact a local real estate agent, even if you don't plan on buying a house within the next six months. Explain your situation and your timeframe honestly. A good real estate agent will be happy to update you on local real estate conditions (this can usually be done by email) and point you in the direction of some good resources. You never know when that perfect house is going to go up for sale, but a real estate agent can keep that search going for you.

The goal of homeownership is a dream you can turn into reality. Start building that dream, one brick at a time.

If you enjoyed this post, you might want to read:

• Should buying your first house be a long-term investment strategy? (Part I)
• Should buying your first house be a long-term investment strategy? (Part II)
• Is buying a house right now a sound financial decision?

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Posted by Rebecca D. Levinson