SANTA CRUZ (August 17, 2008) - If owning a home is in your future, it is not too early to start thinking about it. Even though you may not be ready to make an offer today, there are things you can start doing today to put yourself in position to buy a home down the road.

1) Take care of your credit. It should go without saying that paying your bills on time, as agreed, is the single most important aspect of establishing a good credit history. In order to do that, it is imperative that you not over extend yourself. Obtaining and maintaining three or four credit cards is good for your credit history as long as you don’t spend more than you can pay back. Going into debt beyond your ability to pay back is a slippery slope and the beginning of a downward spiral.

As a side note, you will want to review your credit report for accuracy. While anybody can obtain their own credit report, it is of little use unless it is reviewed by a knowledgeable person who can interpret it for you.

2) Establish stable employment. Lenders like borrowers to have been in the same field of work for the two years prior to applying for a mortgage. There are exceptions, for example, an engineer who has taken four years to get his degree and is now working as an engineer may be considered for a mortgage within a year of starting work because education counts as time in the field. It is not necessary to work for the same employer. It is recognized that employees may change employers in order to improve their situation; however, large gaps between employers can be of concern. A detailed explanation will be required.

Keep in mind that lenders prefer that homebuyers spend no more than 45 - 50 percent of their gross monthly income on all of their long term monthly debt (car payment, student loans, credit card payments, etc.).

3) Save money. It takes a lot of cash to buy a home. If a prospective homebuyer cannot save money, how can he be expected to make a mortgage payment that will most likely be considerably higher than his current rent payment? Refrain from making any large purchases while saving to buy a home. Even after the loan is approved, a purchase can put a kink in the approval. Unless it is a gift from a family member, lenders expect the borrower to use his own, ‘seasoned’ money. Once money is in the borrowers bank account for two monthly bank cycles, the money is considered seasoned.

With these three areas receiving your first priority, it is time to select and meet with a mortgage professional. He or she will help you analyze and scrutinize your credit, income and cash required to buy a home.

Once you have determined what the mortgage industry will allow you to borrow, you can select a real estate professional to help you explore the availability of homes in your price range. While some homes may still go down in value, keep in mind that many homes are receiving multiple offers from motivated buyers. This is a great time to be buying a home if you are qualified to obtain a mortgage.

This column is written every Sunday by Peter Boutell, Certified Mortgage Planner and a principal at Santa Cruz Home Finance. You may reach him at (831) 425-1250 of email him at Peter@SantaCruzHomeFinance.com.