NEW YORK (AP) — Even with the scars left by the housing mess, home ownership is still a goal for many Americans.
If you vowed to make your home ownership dream come true in 2012, it’s time to get started. Indeed the timing may be ideal. Housing market observers say that prices appear to have bottomed out in many markets, and mortgage rates are at their lowest point ever.
But don’t let prognostications cause you to jump in too quickly. As many have learned since the housing bubble burst, being ill-prepared financially can cause lasting damage.
Although there were some positive signs in recent months, it will take many years before the housing market is back on track. In 2011, home sales totaled 4.26 million. That was up slightly from 4.19 million in 2010, but was far below the 6 million that economists equate with healthy housing markets.
That gives prospective home buyers a chance to get their plans in order before taking the plunge.
First, make sure you’re really ready to buy. That’s more than a financial calculation. Consider if you expect to remain in the same city for several years? Ask yourself if you’re ready for the lifestyle change that comes with the responsibility of owning? Will you be able to handle simple maintenance or can you afford to call someone in every time a drain clogs?
You might want to start with some classes through organizations like NeighborWorks America, www.nw.org , where you can learn the basics of home purchasing and upkeep.
Second, make sure you pursue the right type of home for you. There are benefits and pitfalls to various types of ownership. Co-ops and condos, for example, can relieve owners of the responsibility for tasks like shoveling snow and dealing with contractors for major repairs. But both property types require collective decision making for even small items, like rules on holiday decorations, which can be frustrating. Similar issues may arise in townhouse developments.
Single-family homes offer more freedom and control of the property, but place the burden and the costs of everyday maintenance and major projects on the homeowner.
Here are some tips to get started on the path to homeownership:
1. Shop around for a mortgage.
You should visit several banks and credit unions to find out what mortgage amount you may qualify for, before you get your heart set on a home that’s out of reach. Banks these days are looking for substantial down payments — 20 percent of the purchase price is again considered standard. Although it’s not as common as during the boom, banks may still overestimate how much house you can afford. Make sure any home fits into your budget, remembering that property taxes and home insurance will also be part of the monthly payment.
2. Expect competition.
It’s still a buyer’s market, to be sure, but prices are rising in many parts of the country. And the National Association of Realtors says one in five homes sold in 2011 was purchased by an investor. Many buyers from other countries are making purchases, often in cash, so be prepared for competing bids.
3. Educate yourself on inspections.
Home inspections shouldn’t be shrugged off as a routine detail. They can uncover major problems that might convince you to search for another house or bargain down the price. Make sure you know what your inspector is looking for: radon gas, toxic mold, termites and other pests, asbestos and lead paint are not typically included in the standard inspection, according to the National Association of Home Inspectors. Those problems will likely require a separate inspector, or at least a separate fee.
Visit: The guide for first-time homebuyers produced by NeighborWorks America has tips and tools to help you decide if you’re ready to buy and how to manage your finances, at www.keystomyhome.org . The federal Department of Housing and Urban Development also has advice and links to programs in your state, at www.hud.gov .
Download: The free apps from Zillow.com and Realtor.com can help you search for homes for sale, bookmark potential houses and even find driving directions to get there — available for iPhone, iPad or Android
Listen: The “Money 101: Homeowning” series of podcasts by the team from American Public Media’s “Marketplace” programs covers details from finding a good real estate agent to what you need to know about buying a foreclosed property. Find them at iTunesU.