You're in a stable job and you're tired of throwing money away on rent. Or your family has expanded and your once-spacious apartment has become a squeeze. Whatever the reason for it, you're thinking about buying your first house.
Welcome aboard. With interest rates low and inventory high, the time is right for those who do not own to take the plunge, according to Michael Sumichrast, author of "The Complete Book of Home Buying."
Even if a house won't appreciate as much as in the past, you'll still be building equity and saving money on taxes by deducting mortgage interest. Plus, you'll have the satisfaction of living in a home you own.
For those who are new to it, here is an overview of what is involved in buying a home:
* Calculate your finances. Figuring out how much house you can afford -- or whether you can afford one at all -- should be your first step in homeownership. Buying a house requires capital as well as income. You can expect to cough up at least 11 percent of a house's total price upfront in closing costs and down payment, according to Chip Reichhart, executive vice president of Maryland National Mortgage Corp. To buy a $77,000 house, for instance, you will need at least $8,470 in cash.
If you don't have that much on hand, start saving or ask a relative for a gift, Mr. Reichhart advised. "We find that a lot of times families will help out for closing costs," he said.
How expensive a house you can buy depends on your income and debts. The rule of thumb states that you can afford a monthly payment equal to 25 percent to 30 percent of your gross monthly income, Mr. Reichhart said. But you must also consider debts. To do so, calculate a third of your monthly income and subtract monthly bills. The rest is the house payment you can afford. Of course, the larger your down payment, the less you will have to pay each month.
* Decide what you want. Do you want to live in the county or the city, in a condominium or a single-family home, in a new house or an existing one? Are you turned off by old plaster walls? Does wall-to-wall shag carpeting make you cringe? To get a better handle on your likes and dislikes, go to open houses in areas that interest you, Mr. Sumichrast said.
When Bob and Kathleen Bruns started looking for a home last October, they had a basic idea of what they wanted: a Towson-area town house priced between $100,000 and $130,000. After consulting with their Realtor, Brandon Gaines of W. H .C. Wilson & Co., they narrowed the search to Rodgers Forge and the area around Gaywood Road. Mr. Gaines launched the couple on a blitz during which they looked at 40 houses in four days. The result: the Brunses have since moved into a three-bedroom, $125,000 town house in Rodgers Forge.
* Find a Realtor. Although it is possible to house-hunt on your own, having a Realtor to guide you through the process can simplify things. A Realtor will help to qualify you (determine what price house you can afford) as well as provide you access to the Central Maryland Multiple Listing Service, the data base of all homes listed for sale.
When selecting a Realtor, ask friends and family for names of people they have worked with and found competent, says Mary Bell Grempler of Grempler Realty Inc. Call up Realtors and ask them how long they've been in the business and how many first-time homebuyers they've worked with. You want someone who has at least a year or two of experience and has dealt with first-time homebuyers before. You also want to work with someone whose personality doesn't grate on you, since chances are you will be seeing a lot of your Realtor.
Consider dealing with a buyer's agent, a Realtor who works for the buyer. Traditional agents work for the seller. For a more complete description of the differences between buyer's and seller's agents, and names of some local buyer's agents, call the Single Agency Realty Association at (301) 353-1191.
* Hit the streets. Once you have completed all the necessary prerequisites, start looking at houses. Do not make the mistake of falling in love with the first house you see and putting a bid on it, advises Mr. Sumichrast. "You've got to get comparisons," he said, recommending that you look at 30 to 35 houses. Remember to consider the age of the house (newer houses tend to appreciate faster than older ones), its condition and proximity to your job. The neighborhood and schools may also figure into your decision.
* Make an offer. To come up with a bid for a house that you want, ask your Realtor to show you comparable sales for houses in that market, says Pierre Vining, president of the Maryland Association of Realtors. If the sellers of the house you want are asking $130,000, for example, and a similar house in that neighborhood sold for $121,500, you should be able to get the house for the lower amount, Mr. Vining said.