Bringing homeownership closer to reality

PHOENIX (3TV/CBS 5) - It’s tough to buy your first home in this market. But Nathan Grant, the Senior Finance Industry Analyst for moneytips.com, says there are steps you can take to make it closer to reality.

“Regardless of what’s going on externally, like the market that we’re currently in or if things improve or get worse, there are a lot of things you can focus on that are going to be independent to you,” he said.

The market we’re currently in shows record-high mortgage rates, record-high home prices and an extreme lack of supply. “Focus on those things that are within your control,” Grant said.

Moneytips.com lists five signs you are ready to be a home homeowner:

You have a consistent income.
You are responsibly managing your debt.
You have a proper credit utilization ratio. That’s the amount of revolving credit you’re using divided by the total credit available to you.
You’ve saved for a down payment.
You understand the cost of home ownership.

Grant says to start the process, look closely at your credit report and your credit score. “If you haven’t checked your credit report in a while, there could be something on there that’s affecting your credit scores that you don’t even know about,” he said. “If something is there and showing up that’s not legitimate, you can get that removed.”

If you believe you are prepared to be a homeowner and ready for a piece of the American dream, don’t end up house-poor. In other words, don’t spend more than you can afford, including the mortgage payments and property taxes, insurance, maintenance, and utilities.

Mortgage pre-approval may help. “You’re going to have a much clearer understanding of how much you can afford to borrow, and then your expectations are going to be a bit more realistic,” he said, “and you’ll know what price range you should be shopping in.”

Home sellers often prefer working with buyers with at least a 20% down payment. More is even better. But there are USDA loans and programs for first-time home buyers where no down payment is required at all.

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