1. Get A Pre-Qualified Letter

Contact a loaner to get a pre-qualified letter to determine how much you can afford.

2. Know What Kind Of Home You Want

New Home -- One of the main advantages to a new home is... it's new! New homes have new appliances, new plumbing, new roofs, new boilers, new electrical systems, etc. You will not expect to outlay money for repair costs anytime soon, and most new homes come with five- or 10-year warranties. Another advantage is the design process. If you sign a new home contract early enough in the building process, you can make some, if not all, of the decisions about the interior and exterior design.

One important thing to note about buying a new home is that most new home communities welcome real estate agents. So here you should have a strong buyer's agent, and it's important that your interests are represented. "Do your own research" – in this case, find out all you can about the builder.

Resale Home -- An older home or a resale is a house that's had at least one owner. When shopping for an older home, remember it's not going to be perfect. There are likely to be repairs or alterations that you're going to want to make prior to occupancy. It's often best that you consider this in your offer rather than ask the owners to fix them.

It's a good idea to purchase a warranty for a resale home. The cost is usually only a few hundred dollars and your agent can help you choose the one that's best for you. As an added incentive, many home sellers purchase home warranties. These cover the home while the owner is trying to sell it and for a certain period of time after it's sold. Also, definitely pay the few hundred dollars to have a home inspection. It's better to find out the roof needs to be repaired now, rather than two days after you close and the first storm hits.

Fixer-Upper -- Buying a fixer-upper is a good way to own a home that you ordinarily wouldn't be able to afford. If you're a handyman/woman, or you know someone who is, this could be the home for you. You should definitely have a home inspection with this house, and have a contractor give you an estimate on repair costs. Also, ask your lender about special loans with which you can build the repair costs into your mortgage.

A fixer-upper may not be for you, especially if you have small children. Keep in mind that there will be various disruptions, with rooms being closed off, different teams of workmen trooping in and out of the place, the kitchen potentially becoming unusable for a period of time, and so on. Also, weigh the potential savings against the potential disruption of your home life.

Foreclosure -- Another option in finding a better price is a foreclosure home. This is one in which the previous owner could not make the payments, so the mortgage company or note holder has taken possession of the house.

Foreclosures come in all shapes, sizes, and states of disrepair. Any home can be foreclosed on. Some look as though they're about to be condemned; others are in pristine condition. Look for many incentives when buying foreclosed homes -- decreased prices, closing cost assistance, quick closing incentives, low down payments, and special loan programs. If you're interested in this type of home, find a real estate agent who specializes in foreclosures and knows the tricks of the trade.

3. How Do You Decide Where To Buy?

Neighborhood Research
When you purchase a home, you get the neighborhood and all that is in it. Be sure you will be happy in your home and neighborhood. Important considerations when researching a neighborhood include proximity to or information about: fire department, police department, shopping, parks & recreation, transportation, thoroughfare or freeway access, school location and quality of learning, crime statistics, and demographics.

Much information is available online. The local chamber of commerce, police station, library, and REALTOR® will have much of this type of information available.

There is no substitute for spending time walking and driving around the neighborhood during different times of day. Pay attention to noise sources and levels (thoroughfare or freeway, airport, park, business, etc.). Talk to your potential neighbors. The more people you talk to, the better you will understand the community.

4. How Much Should You Offer?

When you find a home you are interested in buying, part of your real estate agent’s job will be to determine its value. If a recent property appraisal exists, your agent should be able to obtain a copy of it for you. If the property is customized, or otherwise hard to appraise, your approval of a professionally prepared appraisal should be considered. If the home is in a tract of similar homes, your agent can prepare a Comparative Market Analysis (CMA).

A CMA is a survey of relevant, recently listed, sold and unsold (MLS-expired) properties. It includes comparable property data and valuation adjustments relating to the home you are considering purchasing. Can you offer more or less than the market value suggested in an appraisal or CMA? YES. Without knowing the value of the property, however, you’ll likely pay too much for it.

5. Where In The Neighborhood Is Best?

Desirable locations include cul-de-sac and interior streets. These are subject to the least amount of traffic. It is hard to avoid every potentially adverse condition, but here are a few to consider. The closer you are to arterial streets (neighborhood entrance), the more traffic there will be. Corner lots maybe larger, but have traffic on two sides. Is the home too close to a school, park, recreational area, business, airport, flight pattern, thoroughfare or freeway? Any train or trolley tracks near by?

Additional considerations may influence your choice of unit in a Planned Unit Development (‘PUD’ – condominium, town home, co-op).

A unit overlooking a pool or courtyard maybe subject to excessive noise. A ground- or top-floor unit maybe quieter than a unit sandwiched between floors. End units are generally quieter. Views command higher values. A low-rise PUD may require the use of stairs – a challenge when carrying groceries.