Buying a Home - Are you prepared?

I am recently divorced and currently I’m renting a 3 bedroom home where my two children and I live. Prior to my divorce I was a stay-at-home mom and I’ve only been back to work for about 8 months. My monthly rent payment is very high and I’ve been researching what I would need to do before I’m able to qualify for a mortgage and buy a home. Larry Mullins in the Money section of had some good tips for new and inexperienced home buyers like me. Here are a few of them:

1.      Check your credit reports:  Make sure all three of your credit reports (Equifax, Experian and Transunion) are accurate. Look them over carefully and if there are any mistakes, investigate them and correct them. (Sounds easy enough!)

2.      Improve your credit score (FICO):  Pay down debt and pay your credit card bills on time. Also, don’t cancel or close credit card accounts with a $0 balance. Keep them open or your FICO score could go down. Your interest rate on your mortgage will be less if you have a higher FICO score which will translate into a lower monthly mortgage payment.(Can do!)

3.      Work in one place for 2 years:  At least 2 years of working for one employer is a plus. It shows mortgage lenders that you’re stable. (Crap! I haven’t been working long enough.)

4.      Increase your income:  Get a second job, start a home business or get married. (Easier said than done! Not sure how I’m going to accomplish increasing my income. I work full time and take care of my two kids. Maybe I should buy a lottery ticket today. It’s worth over $200 million!)                                         

5.      Save your money:  Start saving your money for a down payment. It shows lenders that you are serious about buying a home. It’s a little more difficult and more expensive to get a loan that covers 100% of the mortgage and lenders are leery of these types of loans because many of them end up in foreclosure. (I’m a saver but this one’s tough, especially when I’m rental home poor.)

I guess buying a home is not in my near future quite yet. I have tried looking for a cheaper rental but it would mean moving out of my children’s current school district and I’d like to avoid that if possible. I’ll keep looking and saving and who knows, I might get lucky and win the lottery this weekend. Somebody’s got to win, right?