How to Buy a House

If buying a home is part of your vision this year, then let's take a few minutes to break that vision down into a few goals. Achieving these goals will get you in a new home you can enjoy without causing the money problems a lot of new homeowners face.

Goal #1 – Get Out Of Debt

It's a buyer's market right now. But, you should never buy a home just because the market is great. Buy when you are financially ready. That means being out of debt and having an emergency fund of three to six months of expenses. Why?

If your income is tied up in debt payments, what happens when the roof springs a leak or the water heater goes out? Being debt-free with an emergency fund keeps emergencies like that from becoming crises, because you have the money to fix those problems.

Goal #2 – Save, Save, Save!

These days, Dave's advice to save at least a 10% down payment may actually be more lenient than most banks' lending requirements. You may have to save up a 20% down payment before they'll approve you for a mortgage.

If you're really serious about buying a home this year while prices and interest rates are low, consider taking some extra steps to speed up your saving:

• Get an extra job and save what you make exclusively for your down payment.
• Will you get an income tax refund this year? Instead of lending that money to Uncle Sam, adjust the withholding on your paycheck and bring home more cash to stash in your down payment fund.
• Dave often recommends selling stuff to get out of debt, but you can sell stuff and save the money, too.
• Shop conservatively. Your mortgage payment should be 25% or less of your take-home pay on a 15-year, fixed-rate mortgage.

Goal #3 – Get Pre-Approved

Start by getting pre-approved for a mortgage with your lender. Being pre-approved means you meet all banks' requirements to get a home loan. Becoming pre-approved lets the sellers know you mean business.