How to Buy a House in a Recession for First-time Home-owners

Housing prices are falling, interest rates are at record lows, and new government housing programs mean that now is a great time to buy your first house. All you need is a job, a little savings, and decent (though not perfect) credit. So how exactly do you buy the home of your dreams?

Difficulty: Moderately Challenging

Instructions

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   1. Order your credit report. Once a year you can order your credit reports for free from all three credit reporting bureaus. Cleaning up any mistakes means you will qualify for better rates.

2. 2. Research government programs. First-time buyers who purchase their home By July 1, 2009 are eligible for a $7500 tax cut which can be taken in 2008 or 2009. This is a dollar-for-dollar tax break which means as long as income levels are not exceeded you get a $7500 check minus whatever you owe for taxes. Use this money to cover any unexpected expenses you incur so that your house is not foreclosed on.

3. 3. Save for a small down payment: FHA loans are government backed and require just a 3 1/2% down payment. Take a loan out from your 401K for the down payment or if you are low income you may actually qualify for a down payment assistance program. Get the seller to pay for your closing costs. If you are creative you can still buy a home with very little money down.

4. 4. Research homes online: educate yourself about your local market. Several realtor websites allow you to research what local homes recently sold for to give you more bargaining power. Know what you like, what you can't live without, and what you can compromise before you get caught up in the excitement of putting on offer down.

5. 5. Beware of real estate listing tricks: many companies list too good to be true homes that don't exist to entice you to call so that the can sell you other homes. Also, some "new listings" are actually very old listings that aren't selling and just re-offered at a new price.

6. 6. Get pre-approved before house-hunting: why bother looking at homes that you can't afford? Sellers tend to take buyers who are preapproved more seriously especially in today's economy.

7. 7. Don't be afraid to negotiate: it is a buyer's market! Which means anything and everything is up for grabs- whether it be a lower price, a year's worth of condo fees, money towards closing costs, patio furniture, or money towards home improvements.