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How to buy your 1st home

Thinking of buying your first home? Here's a guide, based on advice from industry experts and consumer advocates.

1. Be prepared

• Get educated: The Department of Housing and Urban Development offers information about local classes on buying a home and getting a mortgage loan: www.hud.gov/buying or 800-569-4287.• Clean up your finances: Pay down debts and save money. Several months before you start looking at homes, visit your bank or credit union. Ask whether you qualify for a market-rate loan. If not, ask how you can improve your financial profile.

• Get pre-approved: When you're ready to find a home, ask a lender to estimate how much you can borrow. Three times annual income is a good rule. Buyers get in trouble when they fall in love with a house and then go shopping for the necessary loan.

• Find a real estate agent: This may be the only expert working for you during the sales process. Pick an agent who has experience in your price range. Insist that the agent represent you exclusively. Do not let the agent also represent the seller.

2. Know what you're buying

• Look for stable neighborhoods: Buying early in a new subdivision is a big risk. Better to buy one of the last new homes in a subdivision -- they're often discounted, and you can see how the neighborhood is holding up. Also consider older neighborhoods, which tend to be more stable. Ask residents about renters and foreclosures. Both are bad signs. You can view foreclosures in any Mecklenburg neighborhood at Charlotte.com and check out property histories on the Mecklenburg County Web site at http://meckcama.co.mecklenburg.nc.us/relookup.

• Pay a home inspector: Get a careful inspection before you buy. Review the report with your real estate agent. You can negotiate with the seller to make many repairs, but only before you close the deal.

3. Borrow carefully

• Make your own down payment: If you don't have the money, you may not be ready to buy a home. Buying a home with no money down means you have no equity, making it harder to sell or refinance if property values decline. Buying a home without any savings means you have no cushion for a loss of income or an unexpected expense.

• Decide how large a mortgage payment you can afford: It is easy to borrow more. Don't count on the lender to exercise restraint on your behalf. Borrow based on the maximum payment, not the introductory payment. If the payment rises after the first or second year, make sure you can still afford the loan in the third year. Don't count on money you haven't received. And don't count on refinancing to escape. Rates could rise. Property values could fall. You could be stuck.

• Shop around for a loan: Mortgage brokers and loan officers don't work for you. They have no legal responsibility to find you the best possible deal. Often, they can make more money by increasing your interest rate. Visit several banks or mortgage brokers. Ask each for a "good faith estimate," a document listing your interest rate and closing costs. Total fees should run between 3 percent and 5 percent of the loan amount. Ask about any fees you don't understand. Feel free to negotiate.

• Insist on getting all paperwork before closing: Review it carefully. Signing means you agree to the terms, even ones you don't understand. Ask plenty of questions. Make sure your financial information is correct and the rate and fees are what you expected. Demand an explanation if there are any new documents at the closing.

Reflections from people who bought homes in Southern Chase:

Jason Verrier

"I wish I had taken my time and saved

money for a down

payment."

Aaron Mahatha

"I could've got an older house, paid less and got a better house

in a better

neighborhood."

Chris Wood

"I figured if they approved me for a loan, then I could afford it. And I couldn't."

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