PMC Mortgage Lender's Blog

First-time home buying is well documented as an “arduous process,” states Colleen Kane, CNBC real estate writer, “and much of that can be attributed to the sheer number of new and unexpected issues” that new home buyers may face.

Here is what they should consider when shoring up finances to buy a house.

Ask yourself, “What can I realistically afford?” Use online mortgage calculators to plug in different loan amounts to produce a reasonable monthly payment.

Then consult with your mortgage banker about getting pre-approved. Pre-approval means you can confidently begin house shopping in the appropriate price range.

“Months before you buy a home begin saving the expected monthly house payment into a separate bank account.” You can see how well you manage your other bills with only the money that is left each month.

Unsuspecting new home buyers often overlook homeowner’s dues, utilities, cable TV, internet, water and garbage, property insurance, moving, furnishing, and maintenance costs in their initial calculations.

Don’t forget to consider real estate taxes in your monthly mortgage equation. If children come into the picture, can you still afford this house on what might become a single income?

Be prepared to “Prove it!” says new home buyer Andy Payment of Atlanta, Georgia. He had to demonstrate he had a 5% down payment plus closing costs in a savings account for more than two months and provide bank statements to demonstrate that it was earned and not gifted. “We didn’t realize this was necessary.”

How’s that credit score looking? “Six months is a good amount of time to start preparing your finances. It can take time to clear up old forgotten debt and dispute any credit score inaccuracies,” offers Gail Cunningham, VP at the National Foundation of Credit Counseling.

When paying down your debt, aim for an amount not more than 30 percent of your total line of credit.

Cunningham wants to “make sure that you have at least three open and active lines of credit, an open-ended account (general purpose card), a closed-end account (car payment), and a personal loan. This demonstrates that you can handle multiple types of credit responsibly.”

New home buyer Corinne Weiner and her fiancé scraped together a larger down payment to lower their mortgage. “I personally cleaned out my IRA for the down payment (as long as it's less than $10K you don't get penalized) because I'm young and can boost it up again,” says Weiner.

Weiner also discovered how changing jobs or moving weighs in on loan decisions. “I can't tell you how much hassle I got because I switched jobs a few times in the past two years,” states Weiner, “I actually had to write a letter to the underwriters explaining why I changed jobs so much!”

Fortunately, homebuyers of the future now have plenty to keep them occupied when preparing for their big purchase.