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How do I prepare to buy my first home?

Q: I am gainfully employed and would like to purchase my first home. My credit score is low because I am just starting to establish credit for myself. My total debt totals less than $2,500 which I am working on clearing up. My credit is poor (585). When should I start my first home-buyer's program?

A: You'll find a good working outline of how to prepare yourself here: //www.hsh.com/first-time-homebuyer/

It starts about a year before your closing, and begins with establishing and improving your credit score. As you're just starting out, it may take you a little longer than 12 months to build up your credit and amass some savings for a down payment, closing and moving costs.

As far as a mortgage goes, with a FICO 585, you will have a little ways to go before lenders will be able to help you; a FICO 620 is pretty much the minimum score for which a loan can be written. This is changing, though, and the FHA program theoretically will back a loan to a borrower with a FICO as low as 580 and a down payment as small as 3.5 percent -- the problem is that lenders are still afraid of taking on risky borrowers, and have imposed so-called "overlays" on credit scores and such, so they will only make a loan to you if you are well above the standard minimums.

Right now, you'll do well to start building up both your credit score and your savings. It can be a challenge to do both, but borrowing and repaying on time is the only way to do it, as is squirreling away as much cash as you can. Set some goals, as in "I want to improve my credit score by n points over the next six months," or "I want to save $1,000 over n period of time" and work toward them.

Since you have some time, read up on mortgages, housing costs, maintenance and more, and start to get to know yourself as a potential homeowner and mortgage borrower (What kind of house do I want? What can I afford? Where can I afford to live? How much will commuting cost me?). There are plenty of questions like these; you don't need to answer them all today or all at once, but the more answers you have, the more confident you'll be as you go along.

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