Home buyers, start your search engines
By Holden Lewis • Bankrate.com

Prime home-buying season is coming. If you plan to join the house-hunting hordes in the spring and early summer, start preparing soon.

May through August mark the busiest months for home sales. Savvy buyers lay the groundwork in advance by educating themselves about the home-buying process and its terminology, checking their credit reports for errors, figuring out how much they can pay for a house, finding mortgage and real estate professionals whom they trust, and narrowing down their choices of neighborhoods.

Things tend to go more smoothly for people who tackle those tasks in that order.

"Education and pre-planning are the first steps toward successful homeownership," says Jean Mills, director of homeownership services for Nehemiah Corp., a down payment assistance provider. Nehemiah offers an online homeownership course. Bankrate.com, too, offers a detailed, 30-lesson online seminar as well as a five-part series of articles on mortgage basics.

First-time buyers can take advantage of online education, take courses offered by community groups or debt-counseling companies, or read books.

Once you understand the lingo and the steps involved in buying a house, it's time to order credit reports and find out credit scores. First, you can get an approximate range of your credit score using the FICO Score Estimator, a new free service from Bankrate and MyFico.com. At MyFico, you can also buy all three of your credit reports.

Once you get them, check the credit reports for errors such as phantom bankruptcies, accounts on your report that belong to someone else and listings of long-closed accounts that are still counted as open. Some creditors don't report positive information about you. Take steps to have the errors fixed.

Around the same time that you're scoping your credit reports, figure out how much you can pay for the house. Like everything about owning a house, this is a more complicated issue than it appears on the surface. But it's an important step, because you -- not a banker or real-estate agent -- should figure out how much you can afford to pay.

The first thing to do, says Mills of Nehemiah Corp., is to "prepare a budget and live a budget." Go through your bills and write down how much you spend in various categories. Are there categories (dining out often is a biggie) that you can cut back? Then live with that budget for a couple of months at least.

Now it's time to think like a banker and calculate your housing expense and debt-to-income ratios.

The housing expense ratio describes the percentage of your before-tax income that would go toward the monthly house payment, including property taxes and insurance. The old rule of thumb says the house payment isn't supposed to exceed 28 percent of the borrowers' income. Today's mortgage-origination software doesn't hew to that old standard, but it's a good one to live by.