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June Is National Homeownership Month: Are You Ready to Buy Your First Home?

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• Maintain your good credit rating – Before you look for a home, establish and maintain a good credit history. This could help you obtain the best rates and terms for your mortgage and even for your homeowners' insurance.
• Establish your home buying budget – Many lenders or housing agencies can provide helpful worksheets to assist you in determining how much you can afford. You need to factor in items like down payments, closing costs and moving expenses.
• Pre-qualify for a home loan – Before you find your dream house, contact a lender to get pre-qualified for a loan. The lender will consider your 4 Cs – Capacity, Credit, Capital and Collateral – in making this determination. Capacity is your ability to repay a loan based on your income and work history. Credit means your history of repaying loans and paying your bills and other obligations. Capital is your wealth in terms of any property or money you have now. Collateral is any property you own that is acceptable as security on a loan. (For those who are new to this country or have a limited credit history, many lenders are willing to establish a nontraditional credit history. Ask your financial institution for more information.)
• Find the home you want to buy – There are many factors to consider, including proximity to work, school, religious institution, shopping, hospitals and parks. Also what type of dwelling you desire – a single-family residence or a condominium or co-op.
• Make an offer – A real estate professional can help you with this process. Depending on market conditions, your offer may be met by competing offers from other buyers or a counter offer from the seller. Once your offer is accepted, you will be required to pay an earnest money deposit of between 1 percent and 5 percent to show you are a serious buyer.
• Apply for a mortgage – The next step is to move forward with the formal mortgage application process. A housing agency, bank or mortgage broker is a good place to start for information. There are many types of mortgages and rates change regularly. Be sure you understand all the terms of your loan before you sign any documents.
• Complete all escrow requirements – The period between when your offer is accepted and when your transaction is final is called escrow. During this time, both the seller and the buyer must complete various tasks, including, but not limited to: completing a property inspection, finalizing all loan documents, making necessary repairs and obtaining insurance. Your real estate agent, lender and escrow officer will help you navigate this process.
• Move in – The day your escrow closes and you receive your house keys is an exciting day for your entire family. Now you can move into the house and begin to reap the benefits of homeownership. You have a valuable asset that will help create wealth for you and for your family for years to come.

These tips come from "Steps to Homeownership" one of three guidebooks in the CreditSmart Asian educational series created and published by Freddie Mac, one of the nation's largest investors in residential mortgages. Companion guides include "The Importance of Good Credit" and "Homeowner Benefits and Responsibilities."

Available in English, Chinese, Korean and Vietnamese, the CreditSmart Asian series was designed to provide valuable information to consumers about building and maintaining good credit, understanding steps to buying a home and protecting their investment.

The guidebooks are available through Asian American community organizations across the nation including Asian Americans for Equality (AAFE), Asian Real Estate Association of America (AREAA), Boat People SOS, Korean Churches for Community Development (KCCD), National Coalition for Asian Pacific American Community Development (National CAPACD), National Congress of Vietnamese Americans, National Asian Pacific Center on Aging (NAPCA) and National Korean American Service & Education Consortium, Inc. (NAKASEC).

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters.

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