When you start thinking about buying a home, you’re likely to feel excited and confident, but also anxious at times. Don’t worry, it’s normal. Buying a home is a big decision, and big decisions can be tough.

Just remember, you’re not alone. The first question you should ask yourself is ‘why do I want to buy?’ Here are some things to consider:

• Owning a home can cost the same as renting.
• You can build equity value.
• You may be able to use your equity as an asset to qualify for loans and other types of credit.
• You may be able to deduct the interest on your home loan from your federal, and sometimes state, income taxes.
• Owning a home can be a good investment over time.

There are many steps in the home-buying process. Once you’re familiar with them, you’ll feel much more comfortable about buying a home. The first step is budgeting. You need to take a close look at your current debt and financial obligations versus your monthly income and determine how much you can afford for your monthly mortgage payments, down payment and closing costs.

Next you should speak with a mortgage specialist. Discuss the budget information you have collected and find out exactly how much of a loan you can qualify for. Knowing your loan amount will be a big advantage when you’re ready to shop for a home. It gives you and your real estate professional a better idea of your price range. Plus, it lets home sellers know you’re a serious buyer, which makes it easier to negotiate with them.

After you know how much house you can afford, it’s time for the fun part — shopping for your new home. Before you start shopping, do a little visualizing. What are you looking for in a home? What’s important to you? Do you want a quiet little Colonial just outside of town? Do you want a chic and urban townhouse?

Whatever you want, or don’t want, is up to you. Have fun with it. As you’re looking around, take notes. Write down the dates you make visits, home addresses and what stands out in your mind. Bring along an instant-picture camera or camcorder, if you like. These kinds of tools will keep all the homes you look at from blurring together.

ADDITIONAL RESOURCES:

Listed below are some items that typically appear in purchase agreements:
• The agreed upon sales price
• The street address and a brief legal description
• The amount of your earnest money deposit, if you have one
• A provision allowing you to withdraw from the sale if your mortgage is not approved.
• The date and place for closing
• The date by which you must agree to the sales terms
• The date you can move in
• A provision for a termite inspection
• Your rights and responsibilities — and those of the seller — if something happens to the property before closing
• Other rights that may affect your property, such as easement rights of utility companies or neighbors
• A provision that allows you to have the property inspected at your expense to determine if repairs are necessary and who is responsible for them
• A description of the personal property and household fixtures included in the sale (Normally, items that are permanently attached, like fencing, are included in the sale. Items that are not permanently attached, like curtains, are not included unless you specify differently in your contract.)

INSURANCE

Insurance is an important part of your mortgage. Your home is a big investment, and you need to protect it should the unthinkable happen. Some types of insurance are even required with certain mortgages.

• Homeowner’s insurance protects your home and possessions from theft and damage. If you purchase a condominium, your homeowner’s association might provide some kind of insurance or may be able to explain what kind you’ll need. You will probably need to secure insurance to protect your individual unit and contents. You will be asked to bring proof of homeowner’s insurance with you to closing.

• If you have a conventional loan with less than a 20 percent down payment, PMI will probably be necessary. This insurance helps minimize the lender’s risk if a foreclosure becomes unavoidable.

• With an FHA loan, this special kind of mortgage insurance will be required. It minimizes the risk to the federal government, which insures your loan.

• If you have a VA loan, you will need to pay a fee to the Department of Veterans Affairs to help defray the cost of the loan guaranty it issues your lender. The loan guaranty makes it possible for you to avoid a down payment.

• You may be obligated to have flood insurance if your home is in a flood hazard area. Such areas are determined by the Federal Emergency Management Agency (FEMA).