GETTING STARTED

1. How do I know if I am ready to buy a home?

Ask yourself these questions:

• Do I have a steady source of income (usually a job)?
• Have I been employed on a regular basis for the last 2-3 years?
• Is my current income reliable?
• Do I have a good record of paying my bills?
• Do I have few outstanding long-term debts, like car payments?
• Do I have money saved for a downpayment?
• Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer "yes" to these questions, you are probably ready to buy your own home.

2. How do I begin the process of buying a home?

Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment (see Question 4 for help)? How much space do you need? What areas of town do you like? After you answer these questions, make a "To Do" list and start doing casual research. Talk to friends and family, drive through neighborhoods and look in the "Homes" section of the newspaper.

3. How does purchasing a home compare with renting?

The most significant advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord.

Owning a home has many benefits. When you make a mortgage payment, you are building equity which is an investment. Owning a home can also qualify you for tax breaks that actually lower your out of pocket costs. Given the freedom, stability and investment security of owning your own home, it is worth it.

4. How does the lender decide the maximum loan amount that I can afford?

The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. According to the FHA, monthly mortgage payments should be no more than 31% of gross income while the mortgage payment combined with non-housing expenses should total no more than 43% of your income. The lender also considers cash available for downpayment, closing costs and credit history when determining your maximum loan amount.

5. How do I select the right real estate agent?

Start by asking family and friends if they can recommend an agent. Compile a list of several agents to talk with before selecting one. The ideal agent knows the local area well and has resources and contacts to help you in your search. Choose an agent who makes you feel comfortable, listens well and can provide all the services you need.

6. How can I determine my housing needs before I begin the search?

Your home should fit the way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes, make a list of your priorities: things like lot location, house size and building style; proximity to schools, your job and public transportation. Finally, you should establish a set of minimum requirements and a "wish list”.

FINDING YOUR HOME

7. What should I look for when deciding on a community?

Select a community that will allow you to best live your daily life. People choose communities based on schools, access to shopping, public transportation and local facilities like libraries and museums. Others prefer the peace and quiet of a rural community. When you find places that you like, talk to people that live there. More than anything, you want to feel comfortable in your new neighborhood.

8. What should I do if I'm feeling excluded from certain neighborhoods?

Immediately contact the U.S. Department of Housing and Urban Development (HUD) if you ever feel excluded from a neighborhood or particular house. Also, contact HUD if you believe you are being discriminated against on the basis of race, color, religion, sex, nationality, familial status, or disability. HUD's Office of Fair Housing and Equal Opportunity has a hotline for reporting incidents of discrimination: 1-800-669-9777 (and 1-800-927-9275 for the hearing impaired).

9. How can I find out about local schools?

You can get information about area school systems by visiting the local schools, contacting the city/county school board, or asking your real estate agent.

10. How can I find out about community resources?

Contact the local chamber of commerce for promotional materials, welcome kits, and maps. Also, talk to your real estate agent or librarian for information on local events and resources.

11. How can I find out how much homes are selling for in certain communities and neighborhoods?

Your real estate agent can give you a ballpark figure by showing you comparable listings maintained on a database.

12. How can I find information on the property tax liability?

The total amount of the previous year's property taxes is usually included in the listing information. If it's not, ask the seller for a tax receipt or contact the local assessor's office. Tax rates can change from year to year, so these figures may be approximate.

13. What other tax issues should I take into consideration?

Keep in mind that your mortgage interest and real estate taxes will be deductible. A qualified real estate professional can give you more details on other tax benefits and liabilities.

14. Is an older home a better value than a new one?

Your taste will decide. Generally, older homes in more established neighborhoods have “character” and lower property tax rates. People who buy older homes, however, shouldn't mind maintaining their homes and making some repairs. Newer homes may be more energy-efficient, use more modern architecture and have systems that are easier to maintain.

15. What should I look for when walking through a home?

Compare the home to your minimum requirements and wish lists, then consider the following:

• Is there enough room for both the present and the future?
• Are there enough bedrooms and bathrooms?
• Is the house structurally sound?
• Do the mechanical systems and appliances work?
• Is the yard big enough?
• Do you like the floor plan?
• Will your furniture fit in the space?
• Is there enough storage space? (Bring a tape measure to better answer these questions.)
• Does anything need to be repaired or replaced? Will the seller pay for the changes?
• Imagine the house throughout the year. Will you be happy there in each season?

Take your time and shop around for the best housing fit. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.

16. What questions should I ask when looking at homes?

Making a list ahead of time will help you organize your thoughts and arrange all of the information you receive. Ask the seller or real estate agent about the house and neighborhood, focusing on quality of life issues.

·         Identify potential problems and strengths.

·         Find out what needs to be repaired or replaced (and who will pay for the changes)..

·         Determine what things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet).

Be sure the seller's or real estate agent's answers are clear and complete. Ask questions until you understand all of the information.

17. How can I keep track of all the homes I see?

If possible, take photographs of each house: the outside, the major rooms, the yard and extra features that you like or ones you see as potential problems. And don't hesitate to return for a second look. Use the HUD Home Scorecard to organize your photos and notes for each house.

18. How many homes should I consider before choosing one?

Visit as many as it takes to find the one you want. On average, homebuyers see 15 houses before choosing one. Communicate often with your real estate agent.

YOU'VE FOUND IT

19. What does a home inspector do and how does an inspection figure in the purchase of a home?

Home inspectors focus especially on the safety of your potential new home, the structure, construction and mechanical systems, and will make you aware of any repairs that are needed.

The inspector does not evaluate whether or not you're getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors and roof. Before you sign a written offer, hire a qualified home inspector. Make the offer contingent upon a satisfactory home inspection because an inspection clause gives you an "out" on buying the house if serious problems are found, or the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house.

NEXT PAGE