At the beginning of the year one of my sisters, decided it was time to become a homeowner. She was tired of being killed on income taxes and finally agreed she needed the write-off.

She called to get my opinion, but did she listen to her big sister Sus? Of course not! She had already made a decision and started the process by visiting model homes in new sub-divisions. Need I say more?

We have all drooled over a perfectly decorated model home. Right then and there we want to purchase it! It’s like getting a whiff of that new car smell. Did you know the new car smell is purposely put there by the auto manufacturer to trigger buyer emotions? Model homes are the same: they’re decorated to trigger emotions.

To make a long story short, she made an offer on the first home she previewed but got cold feet and didn’t go through with the offer. Thank goodness, because they were pushing her into one of those “designer” loans that we have heard so much about lately that have contributed to the current “credit crunch”!

So what should my sister – or any prospective home buyer – have done to prepare for home ownership? Here are the first three steps Sister Sus advises all new home buyers to take before signing on the dotted line:

1. Select a mortgage professional. Once found, work with them to determine the type of mortgage, the monthly payment, down payment and the loan amount you qualify for and need to borrow. In other words, get prequalified.
2. Play house. Once my sister was prequalified for a payment I had her live that way for several months. For example, if you anticipate your monthly mortgage payment including tax and insurance is around $2,500 and your current rent is $1,500, pull out $1,000 out of your monthly pay.Live on the remaining income and see if you lose any peace of mind due to the squeezed income. While you are playing house, ask yourself:
   • Am I stressed over the bills more than before?
   • Do I stop doing things due to money concerns?
   • Do I have to cut back on retirement funding to make this happen?

   If you can live this way, it is time for Step 3.

3. Find an agent. Once you have been formally pre-approved, you want an agent who will negotiate the best price for you. Narrow your selection criteria by price, neighborhood, number of bedrooms, etc.Get a feel for the price range and don’t cross over into higher priced areas, which can only lead to financial disaster.

My sister did all of the above. She called last week: she found the perfect home, has been pre-approved and her offer has been accepted.

I am a hero and my little sister has her tax write-off, a beautiful new loft and peace of mind that comes from living within her means. That is the American Dream!

This entry was posted on Friday, November 2nd, 2007 at 3:17 pm and is filed under Housing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.