Although owning your own home is often considered an important component of the so-called American Dream, wouldn’t it make sense to plan effectively to ensure this doesn’t turn into a nightmare? After more than fifteen years as a Licensed Real Estate Salesperson in New York State, I have created what I often refer to as RICH IDEAS to proceed wisely in terms of buying a home. With that in mind, this article will attempt to briefly consider, examine, review, and discuss a 5-step plan, in order to be adequately, effectively, and wisely prepared for this process and proceed accordingly.

1. Collect/accumulate sufficient funds, for a variety of requirements and needs: It’s smart to proceed, as well prepared as possible, from the start. Well, before you start looking for a house, start saving money systematically. Remember, you will not only need funds for a down payment (often, but not always, 20%), but also funds for other closing costs, including, but not limited to, prepaid real estate taxes, utilities, and other items named in custody. Additionally, most lenders require a showing and proof of funds, several months’ worth of mortgage payments.

2. Get a copy of your Credit Report (if husband and wife get both): You have the right, once a year, to request a free copy of your Credit Report, from one of the major credit organizations/companies. Please review this document carefully and correct any errors. If your score isn’t as high as a lending institution can look for it, start taking steps to improve it, sooner rather than later!

3. Pay another debt: Lending institutions use formulas to determine one’s qualifications to receive funds. They typically focus on one’s debt-to-income ratio. Therefore, pay off your other debt before beginning the process.

4. Do not add any other debt: Avoid taking on more debt, regardless of how convenient and/or attractive it may seem at the moment. Don’t fall into the trap of accepting new store charge accounts, because doing so can compromise your creditworthiness when shopping for a mortgage!

5. Buy houses, within your means: Avoid the get-rich-home trap and look to buy a home, beyond your comfortable means! Know how much you can afford, comfortably and safely, so you can choose wisely and stay comfortable!

Since, for most of us, the value of our home is our most important asset, doesn’t it make sense to proceed with care and wisdom? Will you be up to this task?