First time home buyer? Are you ready for this?

The thought of buying a home for the first time is fun and scary; emotional and confusing; prideful and expensive. I know – I’ve been there. I’ve done that. I’ve got the T-shirt. This is your way to tell the world you’re all grown up, responsible and ready to make a significant financial and lifestyle commitment. But are you really? Let me give you a few tips to be sure that you are ready for this exciting and life-changing experience.

The money. Let’s just get that out of the way. This is multi step (I know, I was a banker for 30+ years)

1. How’s your credit? Before you go talk to a loan officer to get pre-approved, take a serious look at your current credit report. If it has a few negatives on it, best to work on clearing those up first before you start on your mortgage trek. Make sure there are no errors. If you’ve had any late payments, they should be more than a year old and be prepared to explain why you had these slow payments. How much capacity do you have on your credit cards? Capacity is the different between your balance and your limit. Try to get your capacity at 50% or more. The government requires each of the 3 major credit bureaus to provide you with 1 free credit report each year. Go to www.AnnualCreditReport.com to get your credit report.

2. How are your cash reserves for a down payment, closing and all the expenses that go hand-in-hand with buying a house? There are lots of loan programs that require very little down (VA loans generally have no down payment required – and Thank You for your service!) And sellers will often kick in to help you with closing costs. But even with that, lenders will usually require that you have some of your own skin in the game. So be prepared to bring cash to the table at closing. Finally, some loan programs require you prove you will have 2 to 3 monthly house payments socked away in savings AFTER you pay all your closing costs.

3. Go talk to a few mortgage lenders and get pre-approved.

4. Look at the maximum mortgage payment the lender just approved you for. How does it compare to what you pay now for rent? If you pay $1000 today for rent and the mortgage loan officer said you could qualify for $1500 mortgage payment, are you comfortable with that extra $500? Here’s a simple test to find out. When you pay your $1000 rent, immediately pay yourself $500 and stash it in a savings account AND DON’T TOUCH IT! If you can keep paws off, then you’re probably good with the higher payment. If you need to tap into that $500, then you might be setting yourself up for struggle or worse yet failure. DON’T BE HOUSE POOR!

You and your house buying partner need to agree on some priorities for what your house will look like. What is important, not so important and just totally non-negotiable. This will be the location, number of bedrooms and bathrooms, size of the yard, parking, etc. You should each write down what you must have, what you think you need and what you think you would like to have. Get comfortable – this might take a while.

Next, find one real estate agent you like. Just one. That is all you need. Every agent belongs to the Multiple Listing Service and has access to all the same listings as every other agent. So unless you really like getting multiple emails and phone calls about the same properties, stick with one agent you think has got your back and is committed to you.

Finally, be extra nice to your friends and family. You are going to need all the help you can get when you do finally score your first home. They can help you paint, clean up the yard and move. Friends with trucks = best friends!

Best of luck!