The home buying process can be overwhelming for a first time home buyer, giving you the feeling that your financial destiny is rapidly spinning out of control. When it comes to real estate, most people don't have a lot of experience and even less knowledge. Buying a foreclosure home can be even more confusing. The fact is, buying a home is actually a simple process. All you need to do is concentrate on the basics, and the following steps will fall together more easily.

1. You need to get preapproved for a mortgage prior to looking at any homes. This gives you the maximum possible time to understand all the complicated paperwork and terms of your mortgage. Preapproval also shows the seller that you are a serious qualified buyer. This gives you an edge in negotiations. Particularly when competing with other buyers for the best deals. Preapproval for your mortgage will also give you time to solve any approval problems. This can prevent wasting time looking and falling in love with homes before you are able to buy.

2. On the mortgage front, the next thing you should watch out for is to avoid prepayment penalties at all costs. A prepayment penalty means that if you buy the home then later want or need to sell it or refinance it before the prepayment penalty expires, you'll have to thousands extra. You can find a variety of great loans that don't include these types of penalties. If your loan officer proposes a loan that does include prepayment penalties, you should usually turn it down and look for another loan. There is one caveat to this rule. If you know beyond any doubt that you will not qualify for a better loan prior to the expiration of the prepayment penalty and thus won't be able to refinance, it is reasonable to accept what is known as a "soft" prepayment penalty in exchange for a lower interest rate. This means that you would have no penalty if you needed to sell the property

3. As the interest rate markets change over the next year or so, you should also be on the lookout for good adjustable rate mortgages. I know that you have heard many horror stories about adjustable rate mortgages, but there are some that have strict adjustment limits and easy refinancing terms and could save you thousands over a couple of years. An example of a good ARM would be an FHA adjustable rate mortgage. FHA ARM mortgages have strict adjustment limits, no negative amortization (your loan balance only goes down and never up), and a streamlined refinance process.

4. Before purchasing a home, decide how much you can afford. Review your family budget and determine how much you are realistically comfortable paying on a mortgage. If you already manage your finances well, this should be a fast process. It may take a little longer if your finances are not organized, but it will be a highly productive effort. You should have your finances in order before buying a home anyway. In any case, DO NOT rely on your loan officer and real estate broker to tell you how much you should pay. They can very easily get you qualified for a home you cannot comfortably afford and each gets more profit when you buy a higher priced home. However, neither of them will be around to help make the payments later.

5. Once you have your financial house in order, take the time to become familiar with home prices in the area. Become an expert. Do research online to find out what sellers are asking and getting. Be sure to check for foreclosure homes. We are experiencing a very distinct buyer's market in real estate now. You should choose your first home more for its investment value than its dream home qualities. Do not ever pay list price. Expect to pay a minimum of 10% through 30% or more less than similar homes in the area have sold for. The greater the discount the better. This creates the greatest possible potential of avoiding the risks of buying in a down market, and the greatest odds of profiting when it is time to move up to a larger home. Never, ever, pay the full appraised value for a home and wait for inflation to build your equity. This was a losing strategy even during the housing boom. Inflation raises the value of all property. The home you hope to move up to will be getting more expensive due to inflation as well. Make your profit when you buy the home by getting a good deal right out of the gate.

The tips listed above are just few of many basic strategies to help buy your first home. Educate yourself before entering the market. Most first time home buyers begin from a position of weakness by not getting a home buying education before looking at homes. Many of those buyers are now paying the price for that failure as today's mortgage crisis works itself out. Don't let the mistakes of others scare you away from buying a home. Learn the basics and you can still control your destiny.