10 Tips for First-Time Homebuyers

1. Be picky, but don't be unrealistic. There is no perfect home.

2. Do your homework before you start looking. Decide specifically what features you want in a     home and which are most important to you.

3. Get your finances in order. Review your credit report and be sure you have enough money     to cover your down payment and your closing costs

4. Don't wait to get a loan. Talk to a lender and get pre-qualified for a mortgage before you     start looking.

5. Don't ask too many people for opinions. It will drive you crazy. Select one or two people to     turn to if you feel you need a second opinion.

6. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight     is the rental market in your area?

7. Think long-term. Are you looking for a starter house with the idea of moving up in a few     years or do you hope to stay in this home longer? This decision may dictate what type of     home you'll buy as well as type of mortgage terms that suit you best.

8. Don't let yourself be house poor. If you max yourself out to buy the biggest home you can     afford, you'll have no money left for maintenance or decoration or to save money for other      financial goals.

9. Don't be naïve. Insist on a home inspection and if possible get a warranty from the seller to     cover defects within one year.

10. Get help. Consider hiring a REALTOR® as a buyer's representative. Unlike a listing agent,      whose first duty is to the seller, a buyer's representative is working only for you. And often,      buyer's reps are paid out of the seller's commission payment.

5 Reasons You Need a REALTOR®

1. A real estate transaction is complicated. In most cases, buying or selling a home requires    disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and    multi-page government-mandated settlement statements. A knowledgeable guide through    this complexity can help you avoid delays or costly mistakes.

2. Selling or buying a home is time consuming. Even in a strong market, homes in our area stay    on the market for an average of 120 days. And it usually takes another 30 days or so for the    transaction to close after an offer is accepted.

3. Real estate has its own language. If you don't know a CMA from a PUD, you can understand    why it's important to work with someone who speaks that language.

4. REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime,    usually with quite a few years in between each purchase. And even if you've done it before,    laws and regulations change. That's why having an expert on your side is critical.

5. REALTORS® provide objectivity. Since a home often symbolizes family, rest, and security, not    just four walls and roof, home selling or buying is often a very emotional undertaking. And    for most people, a home is the biggest purchase they'll every make. Having a concerned, but    objective, third party helps you keep focused on both the business and emotional issues    most important to you.

7 Reasons to Own Your Own Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage,    property taxes you pay, as well as some of the costs involved in buying your

2. Gains. Over last five years (1998-2002) national home prices have increased at an average    of 5.4 percent annually. And while there's no guarantee of appreciation, a 2001 study by the    National Association of REALTORS® found that the typical homeowner has approximately    $50,000 of unrealized gain in a home.

3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let    you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you    can generally take up to $250,000 ($500,000 for a married couple) as gain without owing    any federal income tax.

5. Predictability. Unlike rent, your mortgage payments don't go up over the years so your    housing costs may actually decline as you own the home longer. However, keep in mind that    property taxes and insurance costs will rise.

6. Freedom. The home is yours. You can decorate any way you want and be able to benefit    from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate    in community activities, lets you and your family establish lasting friendships, and offers your    children the benefit of educational continuity.

Tax Benefits of Home Ownership

The tax deductions you can take for mortgage interest and property taxes greatly increase the financial benefits of home ownership. Here's how it works.
$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value

$12,577 = Total deduction

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)
(12,577 X .28 = $3,521.56)

Note that mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.