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Home ownership can actually add to your savings as mortgage payments help build your net worth. As opposed to rent payments, a portion of your mortgage goes toward building equity (i.e. the difference between the market value of a house and the amount still owed on the mortgage). As you pay off the mortgage, you owe less on the home and "own" a larger share of it.

Another financial benefit of home ownership is that mortgage interest payments are deductible. By owning a home, you can write off the interest on your mortgage on your tax return. In many cases, this will take you above the minimum itemized deductible, allowing you to write off many other items.

On the flip side, there are some situations where renting may be a better financial situation than buying a home. If you will be in a particular community for under three years, if the local economy is not doing well, if unemployment is rising, or if your future income will not provide you with enough for mortgage payments and other financial responsibilities to owning a home, then renting may provide the better option.

When people start thinking about buying a house, one of their first questions is "How much can I pay for a house?"  Look at yourself through the eyes of the lender. Banks want to make sure you are able to afford the home you buy and they will decide if you meet their mortgage requirements.

As a general guide, you can purchase a home worth two or three times your annual income, depending on your savings and debts. Your total monthly payment for housing expenses, which include mortgage principal, interest, taxes, and insurance (PITI), should not exceed 30-40% of your total monthly income.

Get a copy of your current credit report. Verify that all of the information is correct, and if it's not, contact the credit reporting company and have them make corrections where possible. If the inaccurate information involves debts that are still outstanding, or other derogatory information reported by your creditors (such as department stores, hospitals, contractors, etc.), you will need to contact the creditor(s) and work out a way to have this information removed from your credit report.

It's important that you do everything possible to make your credit report as clean as possible before applying for a loan. One of the best things you can do is pay off all of your credit card debt and then close all of your credit card accounts except for one or two at most.

The bottom line is that a good credit report is your passport to obtaining a loan. A bad credit report won't necessarily prevent you from getting a loan, but you may need to do some work to clean it up and make it acceptable to a lender before they'll make a loan to you.