Step 1 : PULL YOUR CREDIT REPORT AND CORRECT ANY ERRORS

By law, under the Fair Credit Report Act, you have the right, free of charge, to dispute any entry on your credit report. Because your credit score and corresponding credit grade will play a significant role in your options when it comes to shopping for interest rates and mortgage programs, it is essential that you review your report. You can request a copy of your credit from TransUnion, Equifax or Experian by mail or online, or you may order a copy of your "merged" report, which lists data from all three credit bureaus, at creditreport.com.

Step 2 : TAKE A FIRST-TIME HOME BUYERS CLASS

Accessing information on home ownership is easier than ever before. A good place to start is a NID-HCA-HUD approved housing counseling agency in your area. Our First Time Homebuyer class offers useful tips on applying, qualifying, and purchasing for first-timers and re-financers

Step 3 : DECIDE HOW MUCH YOU CAN AFFORD

The first step in determining how much house you can afford is to look at your overall long term financial profile. Is it fairly stable? Are your expenses manageable? So on and so forth, generally, a bank or mortgage lender will not give you a loan if the monthly costs of your proposed mortgage amount [payment plus property tax and homeowners insurance] and other monthly debt payments add up to more than 28 to about 31 percent of your gross monthly income the lower your debt-income ratio, the more house you can afford.

Step 4 : DECIDE WHERE YOU'D LIKE TO LIVE

The location of your home, including school districts, business districts, economic growth areas and proximity to state and local highways will contribute to your home's property value.

Step 5 : FIND A REAL ESTATE AGENT

When you are deciding on a new location or neighborhood to buy a new home, a Realtor can help you determine the pros and cons based on your family's needs and preferences.

Step 6 : GET PRE-QUALIFIED

The process of pre-qualification is an essential step. "Realtors require a commitment letter that lets them know you've been pre-approved for a specified loan amount based on your current credit and income," says Craig Hodges, mortgage loan officer and real estate broker at Vision Mortgage in Belvidere, Ill. "If your credit is good, the pre-qualification may last for up to 120 days, but if it's lower than average, it may have to be renewed every 30 days."

Step 7 : INSPECT YOUR HOME AND NEIGHBORHOOD

During your first walk-through of a home, be sure to check out the condition of the roof, the plumbing, walls, floors, carpet, furnace and any interior or exterior damage. Drive through the area during different times of the day to observe traffic patterns and neighborhood routines. In addition to speaking with the sellers, talk to others who live in the neighborhood about their experiences in that location.

Step 8 : MAKE AN OFFER

When you have found the home of your dreams, you are ready to make an offer through a purchase agreement that includes your offer, prospective closing date, down payment, any seller assistance monies and other applicable terms. If you include an earnest money deposit in your purchase contract, be sure that the offer allows you to get your money back if a professional inspection reveals problems with the house or if you are unable to get approved for a mortgage

Step 9 : APPLY FOR A MORTGAGE

Your broker can help select the mortgage that's right for you, including interest rates (fixed or adjustable), length of loan (15, 20 or 30 years), size of loan, type of loan (conventional, FHA, VA) and other fees. Once you've applied, your loan will be submitted for processing, underwriting, all inspections ordered and a closing date set.

Step 10 : CLOSING

At the end of the process, the buyer and seller sign all legal documentation and effectively transfer ownership. The buyer pays remaining costs and down payment while the lawyers, Realtor, closer, agent and loan officers finalize the transaction. Once all paperwork is completed, you will receive the keys.

Private mortgage insurance

If you put less than 20% down on a loan, you will likely have to pay PMI or Private Mortgage Insurance. PMI protects the lender against a loss in the event of default by the borrower. You can ask your mortgage company to remove the PMI if you’ve paid 20% of the loan. However, you will be asked to provide an appraisal. Most lenders require you pay real estate taxes and insurance on a monthly basis. This cost is included in your monthly mortgage payment, placed in an escrow account, and paid out by your mortgage company.