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Take the Worry Out of Homebuying

Although housing prices started to rebound last year and are expected to continue rising in 2013, it’s still
a buyer’s market. Prices remain 30 percent below their peak before the housing crash and mortgage
rates hovering at all-time lows. If you are ready to jump in to the real estate market, here are five things
you need to do before you start looking for a home.

1. Run the numbers.

Put together a financial plan to determine how much home you can really
afford to buy. That way you don’t waste time looking at homes beyond your price range and
you start out with reasonable expectations.

2. Clean up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure
your credit history is as clean as possible. A few months before you start house hunting,
get copies of your credit report. Make sure the facts are correct, and fix any problems you

3. Weigh your options locally
Use this great “rent vs. buy” calculator from the New York Times to see whether buying or
renting might be the better deal in your area.

4.  Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, preapproval from a lender is based on your actual income, debt and credit history.

5. If you can’t put down the usual 20 percent, you may still qualify for a loan.
There are a variety of public and private lenders who, if you qualify, offer low-interest
mortgages that require a small down payment. Keep your downpayment fund in cash or cash
equivalent accounts, so that market movements don’t thwart your plans.