With mortgage lending drying up and stricter credit requirements, what will it take to enter today’s housing market?

Many Americans hope to purchase a home and pursue the “American Dream.” Everyone should understand: lending practices are changing as we speak and tighter qualification requirements will make strong credit even more important than in past years. In today’s market, you can no longer count on non-traditional products like interest-only mortgages, adjustable rate mortgages, stated income or no-doc loans to help you enter the housing market.

Here are some suggestions to prepare your credit and your budget for a strong dose of reality with new lending practices:

* Get copies of all three credit reports and pay for your credit scores. Inaccurate items on your credit report can sabotage your chances of securing good financing. Request copies of all three credit bureau reports free from www.annualcreditreport.com and purchase your credit scores. Dispute inaccuracies and if you’re credit score isn’t at or near 700, postpone your home purchase to allow time to improve your credit score.
* Understand the real cost of home ownership and never let someone tell you what you can afford. You will have many unexpected housing expenses when moving into your first home – maintenance, decorating, increased utilities and more. Review your household spending plan early to determine how much you can afford in monthly mortgage payments and be sure to factor in increased household spending.
* Reduce your debt to income ratio. There are only two ways to accomplish this: increase your income or decrease your debts. If you need help creating a debt repayment plan, Family Credit Counseling Service provides helpful debt and budgeting calculators on their website www.familycredit.org.
* Assume you’ll need a good down payment. Don’t jeopardize your budget or tap out your emergency fund in order to scrape together enough for your down payment; wait to purchase until you can comfortably cover a significant down payment.

The changes in lending will be positive for long-term economic growth and, if you have strong credit and a solid household spending plan, this may be a great opportunity to begin pursuit of your “American Dream.”

If you need assistance understanding your credit, need money management advice, or a copy of our personal budget guide, contact a certified credit counselor with Family Credit Counseling Service at 800-994-3328.

About Family Credit Counseling Service - FCCS is an ISO registered, non-profit agency providing solutions for those seeking financial assistance. FCCS is one of the largest consumer credit counseling agencies, is licensed in over a dozen states, and has been servicing consumers throughout the country for over ten years. FCCS' mission is to reduce the stress in consumer's lives through education, budget counseling and debt management.