by EJ Young

Created on: June 09, 2009   Last Updated: June 18, 2009

With mortgage rates at all-time lows, record numbers of foreclosures flooding the market, and government stimulus money sent to the rescue, more people are reaching out for the American Dream of homeownership. Today's market definitely favors the buyer in the real estate game. However, many pitfalls await if the home buyer is not careful. The following guidelines should help potential homeowners to avoid those common pitfalls.

First, a perspective home buyer needs to invest the time to conduct research before ever looking at that first house. Check your credit report. Mistakes on your report can be remedied, but if you seek financing and your credit score dips, it can be a disaster in getting approved for a loan. A lower score can cause higher interest rates as well.

Next, get prequalified. Prequalifying gives you the price range your lender thinks you can afford. Better yet, try to get preapproved. Preapproved status means you have the loan prepared and waiting for some seller to scoop it up. That makes you a serious contender.

Now find a professional to assist you in finding your first home. This is a huge transaction and you need a person you trust. Take the time to find the right fit for you. Then, let the games begin. Ask to see several houses. One common mistake to avoid is falling in love with the first house you see. Avoid emotion and use sound reasoning when looking at details in a house.

After you find your dream home, take a reality check. Make sure you consider these important details: Have you budgeted for hidden costs? Do you have money for closing costs? Are you getting the best possible interest rate? Will the resale value hold? Will your family fit in this home for several years? If so, then write an offer.

After you write an offer, you wait to find out if it is accepted. At this point, you may need to make some difficult decisions. If your offer is not accepted and the seller gives you a counter offer, is that amount still within your means? Avoid feeling pressured into paying more than you can afford. There are several options available if the original offer is rejected. Your realtor can ask for closing costs or other items to be paid by the seller. After this process, if negotiations are successful, a date for closing on your property is set. Carefully go over all paperwork at the closing. If you have questions about any financial details, ask your realtor. This step is very crucial in avoiding common pitfalls. For example, if the interest rate on paper is not what you expected, clarify those details. Your realtor should assist you with any concerns. After paperwork is signed, you get the keys to your new home.

However, there is still one major obstacle that could be a deal breaker. That obstacle could be the home inspection. This is the real test on the 'guts' of your home. From furnace, to faucets, to wiring and foundations, a thorough home inspection is essential. If the inspector finds any major problems, make sure you know who is responsible for repairs or other costs related to those problems. After all that drama, you are now officially a homeowner. You have succeeded in grabbing a piece of the American Dream! Move in.

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