Buying a home is a major undertaking. Before taking the plunge, make sure that you've thought it through and are ready to proceed.

Deciding to Buy

Consider your motivations for buying to help determine if you are really ready to enter the market.

Personal Considerations

Think about your personal reasons for moving. Do you need a larger home to accommodate a growing family? A shorter commute to work? Don't forget to consider the difficult aspects as well. Are you emotionally attached to your present home - will it be painful to leave? Being mentally and emotionally prepared is the first step toward a well-conceived and well-executed move.

Do You Feel Pressure to Move Now?

Do you feel that you'll be priced out by a rising market if you don't buy now? Or are you afraid you'll miss bargains in a troubled market?

How Long Do You Expect to Own Your New Home?

Buying or selling a home is an expensive and involved process. Closing costs alone can amount to 4-8% of the sale price - for both buyer and seller, making a home purchase financially unattractive unless you plan to own the property for several years. Remember that you'll face another round of closing costs when you sell; so your house will have to appreciate 8-12% just for you to break even.

Assess Your Financial Condition

Do you have enough cash to fund the down payment and closing expenses? Can you comfortably afford the mortgage payments as well as taxes and insurance? Do you have any credit problems?

Homeownership as an Investment

While markets can be turbulent and values occasionally decline, owning a home remains an attractive investment over the long term. Additionally, don't forget to consider the tax advantages of homeownership - mortgage interest is deductible and profits from the sale of a home are usually exempt from capital gains taxes.

Assemble all of your information and develop a good idea of what you want before you begin shopping.

Getting Organized

Your house hunting will be more efficient and less stressful if you take the time to organize yourself. Make sure you know what you can afford, where you want to live, and what features you want in your new home.

Where Do You Want to Live?

Think about the communities in your area and decide which ones you like and why. Consider schools, recreational facilities, and access to work and shopping. Write down the various features you like and dislike about each community; then review the list to decide which areas are right for you. It's important to know where you want to live from the start - otherwise it's too easy to get excited over a great house in the wrong location. Don't forget to consider price range when narrowing down your choice of locations - you'll want to spend your time looking where you'll have a good chance of finding something appropriate.

Make a Features List

List the features you want in your new home, including rooms, room dimensions, lot size, architectural style, access to schools, recreation, etc. Use this wish list when viewing homes to help evaluate each property.

Determine Your Financing Options

Finding the right mortgage is almost as important as finding the right house. There are many financing options available in today's marketplace, so it pays to take the time to find the right type of loan. Many lenders offer pre-approval programs that allow you to secure a loan before you even find your home - giving you a real advantage when negotiating with sellers.

Prequalify for Your Loan

Many lenders allow you to apply for a mortgage before you even find a home. Once prequalified, the only major requirement for your loan is a satisfactory appraisal of the property to be purchased (once you find it). Prequalifying can not only give you peace of mind while shopping; it can really give you an advantage in a tight market - where a seller may preference a buyer who has funding secured.

Getting a Mortgage

The mortgage application process can be confusing and intimidating, especially to first time purchasers - but today's market offers homebuyers more options than ever before.

Have Your Records Ready

Organizing your records ahead of time will help speed things along when you're completing mortgage applications.

Shop For a Lender

There are many types of lenders in today's mortgage market - review their loan terms to decide which offers the best package for your needs. If you have credit problems or other difficulties, look for a lender specializing in this type of loan. Don't forget to check out online lenders as well.

Consider Loan Types and Terms

Today's mortgage market offers a bewildering array of financing options and loan programs - each with different rates, points, and amortization schedules. Consider the details of each so you can select the one that best suits your needs.

Choose the Right Loan

After considering the various mortgage programs available it's time to make your selection. Don't forget to review all aspects of the loan, not just the interest rate - the points, fees, and term can be just as important.

Watch Interest Rates

Keep an eye on interest rates during (and after) your mortgage search. Many lenders offer the option of locking in the interest rate before closing - a valuable alternative if rates are rising.

Apply for Your Loan

Carefully complete each section of the application and provide all of the documentation required by the lender along with the loan application fee. Maintain frequent communication with your loan representative - if you haven't heard anything within 1-2 weeks call and ask about the status of your application. Respond promptly to any requests for additional information.