10 homebuying tips for uneasy times

Mortgages are harder to obtain today, and deals require more money down, but it's still a good time for buyers. Here's how to get the home you want at the best price.

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By David Koeppel, MSN Money

Nervous about buying a home?

You should be. Your home is probably the single biggest investment you'll make in your lifetime. With an unpredictable economy, a mortgage crisis and record foreclosures, the commitment to buy can be downright overwhelming.

In recent years, lax lending standards eliminated some of the obstacles, but now lenders are once again getting picky.

The good news is that for those who qualify for a mortgage -- with a steady income, strong credit and a modicum of savings -- this is actually a good time to purchase a home. Mortgage rates are low, and home prices have been declining in most parts of the United States. Buying my first home

To help you navigate the uncertainties, especially if you're entering the market for the first time, here are 10 tips for buying a house:

1. Find out how much you can afford, and stay within your budget.

Don't overreach. Forget the McMansion on the hill if it's beyond your means. Focus on finding something that will offer affordable monthly payments and a debt load you can handle. Calculator: How much can I afford?

To make sure you fully understand and remain within your boundaries, consider a preapproved mortgage. Many reputable lenders offer them. The preapproval process tells you exactly what you will have to pay. Preapproval also provides some extra peace of mind, ensuring that when the time comes, you'll have financing in place. That can be important to real-estate agents and sellers as well as to buyers.

If you're planning to buy, your household budget should allow for hefty savings toward a down payment, unless you're expecting a generous gift from a family member. The days when first-time buyers could purchase a home with a down payment of less than 10% are gone. Lenders are now requiring buyers to put down a minimum of 10% and sometimes up to 20% to 25%.

"First-time buyers must come to the table with some dollars," says Ilyce Glink, the author of "100 Questions Every First-Time Home Buyer Should Ask" and "100 Questions Every Home Seller Should Ask." "You need more income, a better credit score and to think about how much debt you can carry. It has become a more difficult process." Get your credit score up

2. Shop around for the right agent.

Real-estate agents operate on different internal clocks. One may be inclined to call you every day, while another may want to call every few weeks. Ask questions about the agent's approach and try to find

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one well-suited to your situation.

Ideally, the agent you choose will do a lot of business in your neighborhood of choice and will have been in the business for years, gathering plenty of useful information about lending options, title searches and useful ways to compare properties. Try to avoid real-estate agents who are doing on-the-job training.

"Finding a Realtor is a lot like a short-term marriage," Glink says. "Shop around; look for the Realtor who is working the most. What's their level of experience? Are they a good fit with you personality-wise?"

3. Do your homework.

A diligent and dedicated agent by your side is not enough. Buyers need to research their potential new home and neighborhood as thoroughly as possible. Thankfully, a lot of that work can be done from your bedroom or office computer.

The National Association of Realtors says 84% of buyers use the Internet to help them find a home. Do not be part of that other 16%. You'll find the Net is packed with resources about cities, neighborhoods, crime statistics and school districts. Local bloggers can give today's homebuyers insight into everything from pricing trends to who's feuding with a neighbor down the block.

"The Internet is a terrific tool. When I last looked for a house in 1992, that kind of information was nonexistent," says Elliot Goldstein, 46, who, with his wife, Stacey, 45, and their two children, is planning to move to Hoboken, N.J. "I get virtual house tours, multiple listing services . . . everything I need to find out about Hoboken I can find out online."

4. Visit the neighborhood.

Rich as the information on the Internet is, it's no substitute for showing up. Experts suggest repeated visits to your neighborhood of choice, so you can check out homes for sale and attend open houses. Walk around. Shoot the breeze with the neighbors. Visit the community several times at different times of day.

"Walk it, smell it, hear it," says Dennis Torres, director of real-estate operations at Pepperdine University. "At 3 p.m., maybe your lawn will be overrun with kids getting off school. At 10 p.m., there could be a club that's only open at night playing loud music."

5. Don't be afraid to haggle.

How low can you go? Real-estate agents say it all depends on the pressures facing the individual seller. Some of those pressures are related to particular locations -- towns go up and down in appeal -- and some have to do with the individual's situation. But

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broadly speaking, if ever there was a buyer's market, this it.

"In a strong market, a seller would laugh off a lowball bid," Glink says. "Now you may be able to bid 20% less than you did nine or 12 months ago. Sellers will entertain lowball bids if they're truly desperate to get on with their lives."

Or at least negotiate a few additional amenities. That was the case for first-time homebuyer Jenna Smith, 23, whose six months of near-constant house hunting in suburban Atlanta taught her what she could and couldn't negotiate.

Smith wound up buying into a new suburban development in January. But first she asked the builder to install hardwood floors instead of carpeting. She also wanted a new refrigerator and microwave. The builder eventually agreed, and Smith had her home -- with hardwood floors and appliances -- for $197,000.

6. Buying foreclosed properties? Proceed with caution.

This gets a bit tricky. Real-estate experts are talking a lot about foreclosed properties. Many suggest that, under the right circumstances, exploitation of a foreclosure can give a buyer a nice home at a very nice price. Map: Foreclosures across the country

Foreclosure filings and bank repossessions are up dramatically, according to RealtyTrac, a California company that monitors homes in stages of foreclosure. So much so that some agents and lenders have been organizing weekend bus tours (one charges passengers $97 a ride) to showcase foreclosed properties in hard-hit cities such as Stockton, Calif., Chicago and New Haven, Conn. The tours have been popular both with shoppers searching for homes and with investors interested in buying multiple properties. Check out a foreclosure bus tour

Though buying a foreclosed property can potentially provide big savings, it can also present a lot of problems that may not be apparent. Pepperdine's Torres recommends that buyers avoid homes with title uncertainties and consider only properties that have been officially foreclosed on and deeded back to the foreclosing bank.

7. Find the right lender and mortgage.

Many unscrupulous subprime lenders have been shut down. That doesn't mean there aren't still some shady characters around. Don't be tempted to deal with them. Find a lender with roots in the community and a record of integrity that offers reasonable rates.

It pays to do some comparison shopping. Real-estate agents can be a good source. A good agent should be able to recommend reputable area lenders and help a

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buyer compare types of loans.

"Mortgage rates are very near historic lows, and inventory is high," says Stephanie Singer, a spokeswoman for the National Association of Realtors.

Thorough research of loan offerings will pay off. Smith, the recent buyer from the Atlanta area, landed a 5.875%, 30-year fixed-rate mortgage from her employer, Merrill Lynch. Merrill required her to come up with a 20% down payment on the $197,000 home, or $39,400. Her monthly mortgage payments are about $1,100.

8. A good home inspector is hard to find. But find one.

In recessionary times, the pride of homeownership tends to suffer. It's not that people don't want to maintain their homes; it's that other priorities intervene. With competing pressures coming from credit card bills, skyrocketing gas prices and rising grocery bills, that new paint job on the house may not make it to the top of the list.

A good inspector can help you spot problems that may result from neglect. Bringing in a home inspector is relatively cheap (often from $200 to $300), but according to Torres, it's the least buyers should do to make sure they're purchasing a home in reasonably good shape. Torres recommends buyers accompany inspectors when they examine a home and look out for anything suspicious. Don't be afraid to ask plenty of questions, he adds.

"Ask what every crack, what every stain might be," Torres says. "Look beyond the cosmetic, the paint, the carpet and the flowers. Check under the steps, check under the eaves."

9. Buy for the long run.

Homebuying should be viewed as a long-term investment. Don't expect the kind of price appreciation that occurred in the early 2000s. Buy a home you can live in happily for a good many years, if possible. A long-term commitment will pay dividends in peace of mind.

"A home is about putting down roots," author Glink says. "It's not about fixing or flipping or making a mint no matter what some infomercial tells you."

10. Don't time the market. Do take your time.

When will market prices hit rock-bottom? No one knows for sure, so waiting to get in at the lowest possible price isn't recommended. Still, experts predict it will remain a buyer's market for the foreseeable future, so don't rush.

Goldstein and his wife will be moving into their new

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three-story row house in Hoboken for about $1.2 million at the end of August, allowing his two children to spend a final summer at the family home in Closter, N.J. If negotiations hadn't gone his way, Goldstein was prepared to walk away, he said.

That's the way to do it.

"Don't let other people talk you into something you don't want," says buyer Smith. "It's your house; they don't have to live in it."

Produced by Anh Ly / Graphics by Joe Farro and Anh Ly

Published July 10, 2008