A Checklist for First-Time Homebuyers

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Here are four things you'll need (and two things you won't) when you're ready to switch from renting to owning. Sure, owning a home is the American dream. It's also the largest investment most of us will ever make, so go into it knowing what is and isn't required.

Here's what you'll need:

• Enough money to make monthly mortgage payments. Duh! If a mortgage payment will bust your budget, you can't get rid of your landlord yet. Use a mortgage calculator to estimate your monthly payment.
• Enough income to pay property taxes and homeowner's insurance. The mortgage isn't the only cost you'll have each month. You also have to pay taxes and insurance. If you can't make those payments, say bye-bye to the house.
• The ability to maintain the property. You must keep a home in good repair or it will lose value and you'll lose money. You can do the work yourself or hire it out. Either way, you can’t ignore peeling paint and windows that won’t close, like you did when you were a tenant.
• A decent credit record. If you have lots of late payments, have declared bankruptcy or left old debts unpaid, it's harder to get a mortgage. And if you do get one, your bad credit record will make you pay a much higher interest rate.

Here's what you won't need:

• A big down payment. It's best to make a big down payment so you can skip paying private mortgage insurance (PMI) and lower your monthly payments, but it is possible to buy a house for almost nothing down.
• Experience. In most major cities, real estate companies hold home-buyer education classes for first-timers. Go, even if you have no immediate plans to buy. The information you get can lead you to other sources of help.

Photo by ©iStockphoto.com/theboone

For more information regarding first-time homebuyers visit HGTV.

Anti-Checklist: What Not to Do Until You Close Escrow

Take a list of things to avoid before you close on your new house.By Tara-Nicholle Nelson

Don't Close Any Accounts

It makes it look like you have less available credit. Pay accounts down to 30 percent, or pay them off if you insist, but DON'T close them!

Don't Make Any New Bills

New accounts create a FICO-reducing triple whammy of a new account/inquiry, an account with a short length of repayment history plus a high balance-to-credit limit ratio. (When you first open an auto account or installment account, you are already at your credit limit -- so it looks like you are maxed out.) The exception -- if you have no credit accounts at all, you should open one or two secured credit cards at your bank, then use them (up to 30 percent of the limit) and pay the bills on time every time.

Don't Buy a Car

See above. This also makes it harder for you to have a qualifying debt-to-income ratio, by increasing your debt without increasing your income. As a comedian once observed, "If you have a Land Rover and a landlord -- it's time to reverse your priorities."

Don't Pay Bills Late

You would not believe the number of people whose credit scores actually drop while they are house hunting because they make late payments. I've actually seen people who just barely got pre-approved have their FICO scores drop, find the house, make an offer, and then SURPRISE!! They no longer qualify for the mortgage because they have paid their bills late.

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Feds Keep US Interest Rates Stable

If you were worried about the Feds increasing interest rates, you're in luck. Last Thursday, the Federal Open Market Committee opted not to raise interest rates, to much surprise. Arguing that higher interest rates would only harm potential buyers, officials decided to keep the key interest rate at near-zero. Although US economic conditions have improved thanks to job market gains and declining unemployment, issues in the global financial market are causing officials to remain cautious. Financial instability in global players like China, who have a big impact on world markets, could negatively affect the US. Plus, low inflation caused by drops in oil prices has a negative effect on workers' income, which could hold back economic growth.

While officials are holding off on raising interest rates for now, policymakers warned that rates would be raised by the end of the year. At the moment, however, they are waiting to see if the labor market will grow stronger before doing so.