The First Time Home Buyers Tax credit has caused many people to scurry toward home ownership. Since many of these new searchers haven’t been through the buying process before it’s important for them to have some understanding of the process. I would like to share with you Six Tips to help buyers.

1) How much can you afford to pay? Notice I didn’t ask how much you were approved for, but rather what payment are you comfortable making. I believe this is the important question that must be answered with new home buyers.

2) Where do you want to live? What city, neighborhood, school system is important to you. Knowing where you want to live will determine the price and size of house you can afford.

3) Are you Pre-Approved? There is a big difference between being pre-qualified and pre-approved. A pre-qualification is an estimate of how much you can afford in a mortgage payment. It is based upon the information you provide, and is subject to the approval process, including further details such as a credit report, appraisal, and income verification. The information you provide won’t be verified as part of the pre-qualification process. A pre-approval is a firmer commitment on behalf of the mortgage company and is a more formal process which includes a credit check and even an employment verification. During a pre-approval the mortgage company does all the work of a full approval, except for the appraisal and title search. A credit report will be obtained by the lender to verify your monthly payments on installment loans and credit cards, and to check whether you have a history of making your payments on time. You will also need to provide pay-stubs and W-2 forms (or tax returns if you are self-employed), plus statements from savings and investment accounts to verify your assets. If you’ve been pre-approved for a loan, you can shop for a house with more certainty and less anxiety because you won’t be going through the whole process worrying about your mortgage approval.

4) Do you have a Realtor?  It’s a good idea to hire a professional real estate agent. When you consider how much money you’ll pay for a new home, an agent’s fee will seem miniscule by comparison. Combine that with the peace of mind you get from having professional guidance, and it’s even more apparent why you should use an agent.

5) Do you know what you want? Write down all the things you want from a home. Include the size, features, location, etc. Categorize each item on the list as a “need” or a “want.” This list will save you time, narrow down your search, and help you stay focused.

6) Do you know which Mortgage is best for you? Each type of mortgage has its pros and cons. Finding the one that’s right for you will depend on many factors, such as how long you plan to own the home, how much you can afford to pay up front, etc. When reading about the different types of mortgages, pay close attention to any sentence that starts with “This mortgage might be a good option for you if…”