The First Steps Series-Plan Ahead

In college, my friends and I did not spend a whole lot of time thinking about buying our first home. We were preoccupied with academics, athletics, parties, dating and future career possibilities. However, with my parents being in real estate, I learned young, that there are a number of good reasons to start learning early about what it takes to buy a home and the responsibilities of homeownership.

Here are five recommendations for young people who want to position themselves for homeownership:

1. Establish good credit habits and a favorable credit history. The higher your FICO score, the lower the interest rate you will be offered on a home loan. Get a credit card and use it responsibly. Make sure you make your payments on time every month. Keep track of your credit report. Under a new Federal law, you have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies. To request your free annual report under that law, you must go to http://www.annualcreditreport.com/.
If you're already struggling with credit card debt or have large student loans, take a free workshop from the non-profit Consumer Credit Counseling Service.

2. Start saving for a down payment and closing costs early. Open up a savings account and set up automatic deposits with a bank that offers high rates with no fees and no minimums, such as ING Direct. In years past, it was fairly easy to purchase a home without having a significant amount of money saved. With the current mortgage crisis, lenders have become more strict and requiring 5, 10 and even 20% down payments. The days of no-money down financing are no more. Saving early can be beneficial because you'll get the advantage of compounding interest and have a longer period of time to grow your investments.

3. Educate yourself on the home buying process. Read, Read, Read! There a thousands of books out there about buying a home. Make a financial plan for yourself. You can learn a lot about real estate, budgeting and credit on the Internet. One of my favorites is REALTOR.com® .

4. Research the areas you'd like to live. Do you want to stay in the city you grew up in or do you see yourself living in another city or even another state. Know if you can afford the areas you like. Also find out if those towns offer first time homebuyer incentives?

5. Do you know anyone in real estate that can provide reliable information about the cost of homes in the areas you want to live? Parents, cousins, friends? Don't be afraid to ask questions, you might just get the answers you're looking for!