1. Establish good credit habits and a favorable credit history. Use your credit cards responsibly. Apply for an automobile loan and make your payments on time every month. If you’re currently renting, put your own name on the lease and the utility bills and make sure the rent and the bills are paid every month. If you’re already struggling with credit card debt, consider contacting a non-profit consumer credit counseling service to find out what you need to do right now to pave the way towards a favorable financial history when you decide to pursue a real estate purchase.

2. Start saving for a down payment and closing costs. It is possible, in many parts of the country, to purchase your first piece of real estate without much in the way of savings. New and innovative loan programs have evolved which require a 5 percent down payment or less. In fact, a number of programs now allow purchasers to buy real estate with nothing down. But in high-cost housing areas, starting to save early can be enormously beneficial because you’ll get the advantage of compounding interest and have a longer period of time to grow your investments. Even if you’re counting on the equity in your current home to provide you with settlement dollars for your next purchase, it’s best to get in the habit of making payments to yourself via relatively painless payroll deduction or recurring savings deposits with each paycheck.

In addition to a down payment, purchasers also need cash for closing costs (the final costs related to closing the loan). Several newly emerging loan programs not only allow the purchase of a home with no money down, but also underwrite closing costs. Understand, however, that less money down usually means higher interest rates and higher monthly mortgage payments, so most real estate purchasers choose to buy with some cash up front.

3. Educate yourself about financial management and buying real estate. Your local library and bookstore probably have at least a few shelves of books about financial management and buying real estate. In this day and age the World Wide Web can also be a valuable resource. Take notes, learn about real estate budgeting and credit, and try to make a financial plan for yourself. Become familiar with real estate terms to help you understand the process. Even if this is not your first purchase of real estate, be aware there may be certain terms and real estate "lingo" currently in use with which you are unfamiliar. Touch base with family members and friends who have recently purchased real estate to get their insight as to how the process worked for them, especially if their dealings were in the same community as yours. Frequently, communities have their own unique ways of doing things so it’s best not to assume you’re knowledgeable just because you’ve been down this path before.