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Buying a home

Question: My wife and I are considering buying a house but don't really know where to begin. We've spent the past few years rebuilding our credit after having both filed bankruptcy. We have a good income to debt ratio. We will be first time home buyers.

Can you recommend some resources that will help us get started? There is so much information out there, we are willing to pay someone to help sort through it all. We know we should get prequalified for a loan, but don't know the best resource for that. How do we determine what we can really afford (accounting for property taxes, HOA dues, etc.)? Thanks, Paul, Aliso Viejo, CA

Answer: A good starting point is Home Buying for Dummies. It's by Eric Tyson and Ray Brown. I've interviewed Eric over the years and he's always thoughtful. He's out to help you, not line the pocket of real estate agents or mortgage brokers. It's a bit dated since it was published in 2006, but the basic informaiton is solid. Another useful book is Elizabeth Razzi's The Fearless Home Buyer: Razzi's Rules for Staying in Control of the Deal.

There are a number of home affordability calculators on the web, such as Dinkytown.net and hsh.com. A home is the biggest financial purchase most of us ever make, so be sure it's a wiser course for you financially than continuing to rent.

If you do decide to buy keep the finances conservative. The experience of the past couple of years tells all of us the risks of stretching our finances to own. It's not just the mortgage, taxes and insurance costs that matter. A home is expensive to run and maintain. When you move in, you'll see that the furniture you've accumulated over the years looks wrong. You'll probably need more furniture if you're moving from an apartment into a house. You may love tending to your garden, but that pleasure will costs money. Financial conservatism means leaving behind the notion of buying as much house as you can afford.

Once you've gone through some basic books you can start talking to professionals, such as a banker. Take your time. There is no rush.

Good luck.

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