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Chat Plus: What's the First Step in Buying a Home?

Every other Friday, 1-2 p.m., Post Real Estate Editor Maryann Haggerty and I host a live chat about all things real estate. This is one of the good questions we couldn't cover on Friday.

Washington: After several years of work, I have a stable job, some substantial personal savings (not enough for 20 percent, alas), and it seems like it might be time to finally buy a first home. What's the first step? Figuring out what I can afford, figuring out what loans are available, figuring out what neighborhood is right? Are there any organizations in D.C. that have first time home buyer classes (maybe HUD)?

E.R.: The very first step should be an evening spent going over a detailed household budget so you can determine just how much you would be comfortable spending on housing each month. Don't rely on the lender or the real estate agent to come up with that figure; only you know what you can really live with. Second step should be to buy your credit scores from Fico (I like the basic $15.95 option). Pull your free annual credit reports from the credit bureaus' joint web site. (Note that is not the site that calls itself "free credit report dotcom"--you know the one with the catchy jingle sung by young guys at a Renaissance fair. That one actually requires that you sign up for an annual service to get the so-called free report.)

Once you know what you can afford to spend on housing each month, play with the calculators on our very own Real Estate Page to see what price range you would be in.

Then it's time to shop neighborhoods. You can virtually fly around interactive maps and get a feel for price ranges in different neighborhoods using sites such as Trulia and Zillow. But you also need to get your feet on the street and go see what they're like. Be open to similar neighborhoods in another jurisdiction! Really, it won't hurt to cross the river--into or out of--the District, Virginia or Maryland. Once you've narrowed down your search to two or three neighborhoods, then you can get serious about applying for mortgage pre-approval and looking at homes.

MH: There are plenty of home-buying classes offered locally by reputable non-profit organizations. HUD has indeed assembled very convenient and informative Web pages that provide contact information for certified counseling agencies, by state. (That link is directly to the D.C. page, but from there you can find other jurisdictions, too.)

While these agencies are working hard these days to help borrowers who are in trouble, they also continue to help would-be buyers learn what they need to know to avoid trouble in the future. That page will also point you toward home-buyer assistance programs that can provide access to low-cost loans and other help, such as the District's Housing and Community Development department.

By Elizabeth Razzi  |  April 20, 2009; 6:00 AM ET
Categories:  Buying  | Tags: Trulia, Zillow, first-time buyer, home, home buying, housing, mortgages, real estate  
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