Sometimes, first-time homebuyers don't know what to ask.  That's why we've put together this guide.  To answer some of your first, basic questions, and to prepare you to enter home buying market with both feet planted squarely on the ground, eyes on what you want, and a good idea of what to expect-now and in the future.

Choosing A Home:

Question: Should I dig deep, and try to buy my dream home?  Or should I search for a good starter home?

Answer: Generally speaking, you will become frustrated if you begin your first home buying adventure in search of your dream home.  And, even if you are lucky enough to find and afford you dream home the first time out, you many find that - several years down the line - your dreams have changed and you want to move on!

Your best strategy is to think of homeownership as climbing a ladder.   You do it one step at a time.  For your first house, think in terms of staying four or five years.  Then, plan to trade up by selling your starter home, taking the equity (money you have in the house)  and buying another home that's one step closer to your dream.

Question: I just don't have time to work on a "fixer upper", and that's what starter homes are all about, aren't they?

Answer: Fixer uppers are on great way to enter the home buying market, but they're certainly not the only way.  Townhouses and condominiums also make great starter homes.   They're usually more affordable and have wonderful shared amenities like pools and gyms.  You might also consider living farther from the metropolitan areas.   Novato or Petaluma, for example, are father from San Francisco; therefore, nice homes cost less in these locations.

Question: How do I know what I can afford?

Answer: Roughly speaking, you can afford to buy a home equal in price to three times your gross annual income.  For example, if your household income is $70,000 annually, you can afford to spend $210,000 on a house.  Surprised?  See, you can buy a house!

Question: How can I be sure I'll qualify for a loan?

Answer: At the very least, you should get pre-qualified before you begin your home search. That way, you'll know just how much you can afford and won't waste time looking at homes that aren't yet within your reach. Even better, you should get pre-approved.  Pre-approval means that a lender has reviewed your financial situation and is ready to lend you the money as soon as you're ready to buy.  Pre-approval gives you extra negotiation clout when you find the home on which you want to make an offer.

Question: I've heard that I'll need to put 20 percent down to qualify for a loan. It'll take me years to save that much!

Answer: If a 20 percent down payment seems too stiff for you, don't despair!  You can almost certainly find something more comfortable to slip into.  There are many special programs for first-time homebuyers that require only five percent down.  If you qualify for an FHA program, you'll only need three percent down.  And, if you're a veteran, you may be able to buy your own home with NO money down!

Question: Even if I can qualify for a 5 percent down payment - on a $200,000 mortgage, I'll still need $10,000 down plus closing costs.  I don't have any savings...

Answer: To find your down payment, you must look beyond your savings account:

Do you have a 401(k) plan at work If so, you may be able to borrow against it.

If you can't borrow against your 401(k), you might find that cashing out part of your plan is a sound financial decision when you consider the tax write-offs and the appreciation that your home will offer.  Check with your accountant to find out.

If necessary, there are several ways for your parents to help you with a down payment - through a personal note, a second trust deed, or through a special program that requires them to pledge securities or other assets to the lender.

Question: Is it true that, as a homeowner, I can get tax deductions and increase my take-home pay?

Answer: Yes!  You can deduct some closing costs (like points or loan origination fees), all mortgage interest, and all property taxes, including those levied by state and local governments and school districts.

In fact, you'll be getting so many tax breaks, you might want to consider increasing the number of exemptions you claim on your pay check.  That'll increase your take-home pay and help you make your mortgage payments.  Talk this over with your accountant to be sure.

Choosing A Realtor:

Question: How do I know what to look for in a real estate professional?

Answer: Look for a sale associate who has lots of contacts, lots of insight - someone who might know about the perfect home before it comes on the market, someone who can share your needs with other agents.

Wasn't That Easy?

Now you know.  You can afford to buy a home, and the whole process is a lot easier than you ever imagined.  The first home you buy may not be the ultimate home of your dreams, but it will be your first step toward getting the home you first step toward getting the home you really want.  And once you take that step, your monthly payments will be going into your future - not your landlord's pocket.