For most Americans, owning your own home is part of the American Dream. Underneath all of the arguments about whether or not buying a house is a good investment, and all of the bickering about Fannie May, Freddie Mac and all of the other housing lenders and programs, most Americans really do want a corner of this globe to call their own. And most of us are willing to pay the homeowners insurance, utilities, property taxes, and other related expenses that go with having a house of our own and a mortgage.

But before you buy that first home, take a moment to consider the fact that you could be putting yourself in a really bad situation if you go into the process with poor credit. We know that you can get a mortgage. But should you? The sector of the mortgage industry that caters to those with credit problems is quickly gaining a bad reputation for putting people into bad situations with little regard to what’s actually good for them.

Consider this: if your credit is poor, you’re going to pay a higher interest rate. While that may not seem like a big deal, a few points on your interest rate adds up to a whole lot of dollars over the course of a thirty year mortgage. In most cases, whether you want to hear it or not, you’d be better off spending a year or two really focusing on paying off your other debts and building some positive credit history than jumping into a mortgage knowing that your credit is poor.

Also, start saving before you buy a house. Ideally, you should have at least 20% of the total price of the house as a down payment. We know, this has gone the way of the dinosaur. We know most people, even with bad credit, can get a house with nothing down. And we also know that most realtors will encourage you to buy more home if you have that much to put as a down payment.

When it comes to buying a house, though, you need to realize that the only person who’s going to really look out for your best interests is you. The realtor is looking out for a commission, and 3% of more is more. The same holds true of lenders. Show some discipline when it comes to this, and save up for the down payment, then buy a home that you can afford to put 20% down on.

Waiting until your credit is good and you actually can afford to buy a home will not only save you a lot of money, but will also make it much less likely that you will lose your home to foreclosure. So, slow down. Buy a house, but wait for the right time and opportunity.

Photo via juhansonin