Buying a home can be so nerve-wracking that a first timer might be tempted to give up and go back to renting. The learning curve is indeed very steep, but you can resolve most of the issues before they occur with a little preparation. Here are some tips to make your life easier as you go through the process of buying your first home:

  • Pay down Your Debt

    Get your old debt paid down before applying for a mortgage. This means any credit card or student loan debt. If you neglect this, you may not get your loan or you may get less than optimal terms. In many cases, the bulk of a first time homebuyer's debt is in the form of student loans. Be careful about making your payments on time or you may find yourself with a poor credit score and be unable to qualify for a home loan.

  • Build up Your Savings

    Do what you have to in order to save money. Consider steps such as moving back in with your parents or not taking vacations. As a first time homebuyer, you will need to embrace frugality in order to own a home.

  • Establish a Budget and Stick to It

    The first step is to determine the kind of home that you can really afford. The general rule is to opt for a home that costs about two and a half times your annual wages. Next, you will want to factor in all of your expenses. Keep your monthly bills in mind. For example, you will want to know how much you will be spending on utilities in your new home. Note that there will be maintenance expenses as it is only a matter of time before you will need to cover a costly repair or replacement. Once you think you have a budget, use it to practice. Before you get your mortgage, deposit payments into a savings account and leave the money there. This will give you an idea of whether you can really afford your mortgage or not.

  • Consider the Length of Your Home Loan

    Why is the length of your mortgage term important? Consider the fact that a 15-year mortgage will take half the time to pay off when compared to a 30-year mortgage loan. Also, remember that the monthly payments will be significantly more. They will not be double the amount of the 30-year ones since you will be paying less interest over a shorter period, but they will still be a lot higher.

  • Gather your Paperwork

    Lenders will likely want your wage and tax statements (your W2s) for the last two years. They will want yours and those of your spouse as well. Also, they will want to see federal tax returns for the last two years as well as two or three months worth of bank statements. If you own stocks, bonds or mutual funds, they will want to see asset statements. You will  need to provide a copy of your current driver's license along with everything else. Note that some lenders will request a credit report fee.

  • Think About Where You Want to Live

    Avoid casting too wide a net when considering places to live. Having too many options may make the decision difficult. Focus on a specific area. You should drive through your prospective neighborhood to get a feel for it before deciding on a property.