Owning your own home has always been an important part of the American dream. Finding a place that you can call your own is a wonderful thing. With the decline in home values this dream is available to many people for the first time. But a quick look at the headlines may make the whole process sound daunting, confusing, and dangerous.

Done the wrong way this part of the American dream can quickly become a nightmare. Follow these tips to keep you on the right track to realize your own dreams of homeownership.

Know what you can afford

Before shopping for a home it is very important that you have a firm understanding of how much you can afford to spend. Consider that 100% of the people that have gone through foreclosure were determined, by their bank, to be financially solvent enough to purchase their home.

Just because a bank will approve you does not mean that you can afford it. It is your responsibility to know how much you can afford.

Check your credit

Before you go out home shopping pull a free copy of your credit report and review it. Mistakes on credit reports are fairly common. Verify that your credit report is completely accurate. If not contact the credit reporting company and notify them of the error. Additionally, request that they notify the other two credit bureaus and notify them of the error as well.

To fail to verify your credit and have any errors fixed may sabotage your chances of getting a home from the very beginning. Don’t fall into this situation, it happens very often.

Also address the things on your credit report that may be accurate but bringing down your credit score. Late payments, delinquencies, liens… all of these will make home shopping harder. All of these need to be addressed, disputed, or paid.

Secure pre-approval

Secure pre-approval from a mortgage company or bank prior to home shopping. This will allow you to stay within your limits and lets you know what a bank will approve you for. This way you don’t have to guess at whether you will be approved for that home that you have fallen in love with.

A pre-approval means that you have discussed already the terms of the loan, your payments, and approximate closing coasts. Keep in mind what you have already determined that you can afford. The bank or mortgage company will provide you with a letter indicating your pre-approved status.

This letter is an excellent bargaining chip with home sellers. Once a seller knows that you are already pre-approved and that your offer is legitimate they are typically more willing to deal.

Shop wisely

Home shopping an be an overwhelming, albeit exciting, experience. In many cases it is a good idea to have a professional with you to help you notice the pros and cons of one house over another. A realtor can be a valuable source of information, buy be wary of a potential conflict of interest.

Remain cognizant of the way the home feels. Can you imagine yourself in this home? Will it meet your needs? Price is an important, vital consideration, but not the only consideration. Check the doors, cabinets, drawer… pretty much anything you can think of to make sure that nothing is broken. Also keep an eye open for stains and dents in the walls and flooring. If the price is right it may be worth just fixing these things later, but remember that this will be a future expense.

Get it inspected

A good home inspector will be well worth the fee. Once you find that seemingly perfect home hire an inspector to thoroughly examine the home. A good home inspector will examine every aspect of the home, all of those elements that you may not know to check or know how to inspect.

They will search for signs of water damage and neglect of the hone’s important units. In general, they will ensure that the home is actually livable and worth your investment.

Congratulations! Deciding to purchase a home is an exciting adventure. Make sure you follow these suggestions to help make the process as easy and pain free as possible.

Contributed by Chris Molnar, editor of Credit to the Wise.com. Before buying a house, make sure your finances are in order. Help is available with debt consolidation companies and credit counseling services so you can buy your home free of debt worries.

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