Home-buying guidelines

Real estate industry experts recommend careful preparation when buying a first home:

*Identify the home you want: condo, single-family home, something that includes a rental unit?

*Determine what you can borrow. A rough estimate is 2.5 times your gross salary, so if you earn $50,000, you can borrow up to $125,000. Consider pre-qualification - when the bank determines how much you can borrow - or pre-approval - when a lender agrees to lend you a specific amount even before you buy.

*Figure out how much of a down payment you will need. At least 20 percent down often means a better interest rate and no premiums for private mortgage insurance - $50 to $90 per month.

*Choose the areas you can afford. Tour neighborhoods, ask brokers, check newspaper listings and Web sites.

*Find a lawyer to guide you through the process.

*Once you've found your dream home, find out what comparable homes have sold for by checking newspapers, online sources, and city or county records offices. Then make an informed offer.

Most first offers are for about 90 percent of the asking price. But you may bid more or less depending on your estimate of the home's value. A buyer's agent can also help figure how much to offer and assist with negotiations.

*Once you've settled on a price, have your lawyer check the contract.

*Get a home inspection - usually five to 10 days after agreeing on a price. Hire a certified home inspector to spend several hours making sure the roof doesn't leak, the foundation is secure, the electricity flows, etc. If something is substandard - such as a leaky roof - you, your lawyer, or your real estate agent would tell the seller to make repairs, or give you money to do it. If they refuse, you can void the contract.

*Once the inspector is satisfied, the financing is approved, and the closing date set, do a final walk through. See if the dishwasher works, the tub drains, or the home has suffered any damage since you signed the contract. The seller should repair any damage after the closing or set aside money for you to do it.

*Set a closing date. The end of the month allows you to put off that first mortgage payment for another month.

*Close the deal. Often the closing is at a bank, a lawyer or real estate agent's office, or at a title company (an insurance company you hire to ensure the seller actually owns the home and can sell it).

The closing requires lots of signing on lots of papers, most of it by you but also the title company representative, your lawyer, the seller, the seller's lawyer, and any real estate agents. Then you get the keys and move in.