Nov. 14, 2007 - Buying your first home

Surefire ways to make it happen

Buying and selling real estate is getting back to basics. Here are a few tips for first time home buyers.

Clean up your finances Your credit history will determine the loan terms and mortgage rates you qualify for. You could be offered a smaller loan or charged a higher rate if a lender is concerned you might not be able to repay. Also consider paying down some debt, especially high-interest debt such as credit cards that might flag you as a riskier borrower. For more on this read my other posting, "Your credit history"

Keep it separate Set up a separate account for your down-payment funds, so the money doesn't get intermingled with other savings and so you can keep track of how much you save. This would probably be a taxable account at a bank, credit union or brokerage firm.

Aim for 20 percent down I know this is easier said than done. But, aim to save up 20 percent or more of the price. The risk of putting down too little: If the home falls in value and you sell at a loss, you'll owe more to the lender than you receive from the buyer. In addition, many mortgages require buyers who put down less than 20 percent to get private mortgage insurance, which can add $80 to $100 to your monthly bill. And the less you put down, the higher your loan balance and therefore your monthly payment will be.

Get extra help Few first-time buyers pony up the entire down payment on their own. Nearly 23 percent of first down payments come as gifts from relatives and friends, according to a recent survey by the National Association of Realtors.

When you are ready to take the first leap into home ownership, contact a mortgage advisor and get pre-approved, not just prequalified. For more information, go to Century21 Mortgage

Disclosure - Century 21 Our Town Realty is affiliated with Century 21 Mortgage