If you're in the market to purchase a pre-construction home, a professional real estate agent, representing your interests and not the builder, can help guide you in the buying process. You want to hire an agent that has experience with new home developments, contracts and builders. The agent's job is to negotiate on your behalf, helping you to purchase the best home for the least amount of money and stress possible.

In retail, nothing attracts more customers than a good sale. And seeing other people buy only adds to the excitement. This same principal is also true when it comes to new home developments. At the pre-construction stage, developers may have their model homes up and ready, but are looking more like construction sites than planned communities. Under-pricing at the beginning stages of building is common practice among developers, in order to get home sales rolling. Any developer will tell you that its easier to sell a house when a few are already sold and construction is underway.

You may be wondering how much of savings you could benefit from at the pre-construction stage? Homes sold after a development is complete can sell anywhere from 20% to 30% more than at the pre-construction price. For example, the same $300.000 pre-construction priced house could cost you between $360,00 - $390,000 when the pre-construction incentive period is over. With this amount of savings, you could include many upgrades and still come out smelling like a rose.

If you're one of the pioneer residents in a new home community, make sure you'll be content  being virtually alone until other residents move in. And by the way, you'll also be living in a construction zone, surrounded by building materials, trash dumpsters, port-a-potties and equipment until the homes are built in your phase. There will be constant noise of workers and machinery to deal, and if you've got small kids, you must consider their safety when playing outdoors.

You want to find out as much about the builder of your newly constructed home as possible. Go online and research the builder's track record regarding larger residential projects. You'll find out quite a bit of information by simply typing in their name, followed by "complaints." You can also learn about the builder's reputation by checking with the better business bureau (BBB).

When choosing a builder for your new home, try and find one that has a comparable development in some other location. It's worth the time and effort to drive to their other  developments and check them out. Speak to the homeowners in those communities and find out how satisfied they are with their homes. It's the best way of finding out how a builder's craftsmanship, customer service and professionalism really measure up. The priceless information you'll glean by doing the leg work can save you from making a costly mistake.

Once you've found the right builder, the next step is researching the neighborhood you're thinking about living in. A good place to find information is the local town or city zoning board. If there are vacant fields adjacent to your chosen neighborhood, find out what they're zoned for.  You may also want to know about the schools allocated for your community. Please don't listen too intently on what builder sales reps have to say about the plans for the area. You'll probably be told how "fabulous" the neighborhood is and will be - all in the name of a sale. You must do your own fact gathering.

There are several steps to buying a pre-construction home. Because of this, make sure you know exactly at what point you can back out of the deal, which is usually before construction is complete. Make sure you’re comfortable with your commitment to purchase the house by then. You'll want to visit the site regularly to make sure construction is progressing according to schedule. It's a good idea to arrange these visits ahead of time with the developer, as they prefer to know who and when someone is visiting. When buying a new construction home, bring in a qualified home inspector to make sure that construction is sound and it meets your expectations, before you close.

Pre-construction can be a great way to purchase a brand new home at an exceptional price. For many new home buyers, making a few concessions in convenience is worth the money saved in the end.

When you put your house on the market, it becomes a commodity or product that needs to be packaged and marketed just right, in order to sell. Home staging does exactly that. In the current real estate market, a successfully staged home will give you the competitive edge you need to stand out from your competition. Successful staging will enhance your home's positive attributes, minimize any imperfections and create moods that entice buyers to want to live there.

Home staging may be as basic as re-arranging some of the items you already own or adding a few new pieces of furniture, art and accessories to the mix. Staging will also include getting rid of distractions and clutter along with creating or highlighting existing focal points. The goal of home staging is to make your home look as warm and welcoming as possible; A home that a potential buyer would want to call their own.

Because of today's competitive real estate market, staging is becoming an increasingly more important step in selling a home. Here's the results of a 2003 HomeGain Survey of 2,000 real estate agents nationwide on home staging:

• 76% of agents recommended home staging for a quicker and more profitable sale.

• Typical Home staging costs ranged from $212 - 1,089.

• After a home was staged, the increase in sales price ranged from $2,275 - $2,841.

• The average return on a home staging investment was 169%.

The process of staging is what you do after you've cleaned, organized, removed clutter, painted, and made any necessary repairs. It's the scrumptious icing on the cake.

A fun way to learn about home staging techniques first-hand is to tour a few new home developments. Since many of the houses will not be built yet, developers must rely on professionally staged model homes to help them sell.

Staging tricks-of-the-trade can be used to create pleasing vignettes throughout each room of your home. The following items are commonly used by professional home stagers: Plants (silk and live), mirrors, lighting (floor & table-top), decorative pillows and towels, area  rugs, baskets, books, vases of flowers, bowels of fruit, potpourri, scented candles, Afghans and Art (wall and table top). Staging has a lot to do with the placement of objects as well as how they are grouped together to create a desired mood.

Don't forget to stage the surrounding outdoor area of our home as well. Items such as cloth adorned picnic tables, potted flowers, tiki torches and cozy benches will add warmth, charm and personality to your backyard.

Creating  curb appeal in the front of your house is just as important. If potential buyers aren't attracted to your home from the outside, good luck getting them in the front door. Many potential buyers will first look at a house from the street. If they like what they see out there, chances are they'll come inside for a tour. Well lit pathways, potted plants and flowers, a manicured lawn, awnings, shutters and/ or an attractive mail box are ways of creating more curb appeal for your home.

So, before you even put your house on the market, get it ready to sell first. Home staging is a must if you want to get your home sold quickly and for more money in today's competitive real estate market.

You probably already have a pretty good idea about how much money you want to borrow for a new home. That's the easy part. How much mortgage you can actually afford is really the right question to ask yourself.  Keep in mind, there's more items factored into your monthly housing expense than just a mortgage. Lenders will loan you an amount they feel you can afford to borrow. It is up to you to decide what you can afford to pay each month, year after year, by creating a workable budget.

Figuring out the size of a mortgage, in order to stay within a budget, does have it's challenges. The reason for this is due to the variable components that make up your total monthly house payment, such as: homeowners insurance, property tax, maintenance/improvement costs, and the loan if it's adjustable mortgage(ARM).

Let's look at each of these items more closely:

Homeowners Insurance
Lenders will require you to show proof of homeowners insurance before you will be able to close on your new home. In the eyes of the lender, there is good reason for this. Let’s say you put down 20% of the purchase price of a new home and the lender puts up the remaining 80%. This means that the lender has more at stake than you if something should happen to the home (fire, tornado, hurricane, flood, etc.). Most lenders will require you to purchase private mortgage insurance (PMI) if you are putting less than 20% down on the purchase price.

Keep in mind, that as a homeowner, you'll be susceptible to annual changes in insurance premium rates. When your policy renews, you may find that coverage for some items will now be optional, included at a higher rate or with a separate rider.

Property Tax 
New homeowners can be in for a surprise if they overlook the cost of property taxes. Hiring a professional real estate agent can be helpful in showing you homes in specific locations where the tax rates are lower. As you figure your monthly payments, make sure you add on what the monthly tax assessment will likely be on the amount you paid. It's a good idea to calculate what you think you will owe in taxes for the rest of the year and include it in your mortgage payment as additional escrow. Be prepared to see your taxes go up the second year of owning your home.

Maintenance & Repairs Costs 
You should figure that your house will need some maintenance and repairs down the road. Painting and similar improvements can be done at your discretion as finances permit. But other manditory repairs such as faulty appliancess, electrical problems, broken windows and leaky roofs sneak up on you without notice. These are the out-of-pocket expenses that can't wait.

Also calculate within your budget the nonessential improvements you'll want to make on your home such as buying new furniture, remodleing, landscaping, etc. Without a budget, these costs will quickly add up. What you can expect to pay on improvements will be based on your previous spending behavior and the type of home improvement projects you like to get involved with.

After factoring in the total monthly house expense, you may come to the conclusion that the mortgage you thought you could afford doesn't quite add up. At this point, you'll need to choose a less expensive property and/or take out a smaller mortgage loan that fits within your budget. If you change the amount you’re willing to spend on a new home, the size of your mortgage and the rest of your total monthly housing expense will change along with it. As you can see, the mortgage alone is only one slice of the pie.

Curb appeal is a real estate term for the at-a-glance attractiveness that a house has from the street. Television programs like "Flip This House" were created to demonstrate various ways of enhancing the curb appeal of a property for a quicker and more profitable sale. If you want to sell your home in today's competitive real estate market, you'll need to make sure your home has curb appeal. "These days, 70 percent of home buyers get their first look at a house from a picture on the Internet," says Al Mansell, president of the National Association of Realtors. "If this picture is unappealing, most people won't look any farther."

The old saying, “You can’t judge a book by its cover” is generally true for the most part. However, an enticing cover can influence a browser to at least flip to the table of contents. This same principle applies to selling a home.

The exterior of a home, along with its landscaping, will make the first impression on potential buyers, for better or for worse. If your house looks particulary shabby on the outside, more than likely, buyers are going to assume that it's equaly as shabby on the inside. Unless a potential buyer is looking for a deal on a fixer-upper, they will pass by a dowdy looking house to look at the next.

It can be difficult to really see your own house objectively, the same way that a potential buyer might. You've grown too accustomed to the way it looks. However, if you want it to sell, you must stop thinking of it as "your home." Instead, think of it as a "commodity" that you want to sell and for the highest amount possible.

It's a good idea to drive by your house as if you were a potential buyer, approaching it from every angle. Better yet, invite someone along with you who can be objective about what they see. What you miss and what others see will surprise you, both good and bad. Park in front of your house and walk towards it, looking around as if this was your first visit. What's your first impression of the house and yard area? Ask yourself what  the best exterior features of the house are and how you can enhance them. Then ask what the worst exterior features are and how can you minimize or improve them.

You can play up architectural details with contrasting paint colors on trim, columns, steps, doors,and railing and banisters. You can also play down less attractive or dated features with paint that is the same base color of the house. And if the house is truly lack luster in style, try installing a charming lamp post, a mail box, fencing, shutters, awnings or a wreath on the door.
Well groomed landscaping should be a priority for creating curb appeal. Adding elements to your landscaping can create curb appeal, and at other times, removing something is more effective. Clean up your yard. Removing old shrubs. Add mulch and a few new plants to freshen things up. You want to enhance the exterior of the house with landscaping details, yett not allow the yard take over. Take care of any over-growth of shrubs, trees or bushes that need pruning.

A welcome mat on your front porch isn't always enough to make your home inviting enough to sell. Adding a little TLC and personality will give potential home buyers a wink that says "Welcome." As you can see, there are numerous ways to add a little panache appeal, so that your house sell for maximum dollars and with ease.

As a homeowner, you will be eligible for many home-related tax expenses. These tax breaks are available whether you own a single-family home, town house, condominium,cooperative apartment or mobile home. But, in order to take maximum advantage of your home, your taxes will likely get a bit more complicated if you're not used to being an itemizer. As a homeowner, you will now be in the 1040 long form and Schedule A club, where you'll have to itemize deductions. For the majority of homeowners, the work of itemizing is worth it when it comes to  tax time.

And of course, one of the biggest tax benefits you'll receive from homeownership is the ability to deduct your mortgage interest. This is especially good for new homeowners because the majority of your monthly payments go towards loan interest anyway. For example,  if you to take out a $500,000 mortgage and were paying 6.5% interest on a 30-year loan, your monthly payments would be $3,160. In the first year, approximately $2,600 - $2,700 of your monthly payment would go towards interest. The rest of your payment would be going towards the principle. The IRS will allow you to deduct up to one million dollars, unless you are one of the fortunate owners of a multi-million dollar mansion. In that case, you'll have a limit on the amount of interest that can be deducted from your loan.

Your lender should provide you with IRS Form 1098, which should include all the loan interest you paid for the previous year. This amount you would deduct on schedule A. You'll want to make sure the 1098 includes interest you paid from the date you closed on your new home to the end of that month.

Homeowners can also benefit from any points paid on their mortgage. Points can be deducted as interest if you paid enough at closing (down-payment) to cover the points. Most lenders want you to pay points when you take out a home loan in order to buy down the mortgage rate. A point is usually a percentage of the loan amount. If you paid two points (each point is 1% of the loan) on a $500,000 loan, you would be allowed to write off $10,000 in same year you purchase the home. This could reduce your tax bill by up to $2,800 if you're in the 28% bracket. The total amount that's deductible should be included on your 1098 form.

You can also deduct any points you paid if you decide to refinance, but you'll be required to spread that deduction over the life of the loan. For example, if you refinanced to a new 30-year $500,000 loan and payed for two points, you would  need to spread that $10,000 write-off over the 30-year term of the loan. This would allow you to take a $333 deduction per year. If you decide to sell or refinance your home before paying off the mortgage, you can deduct the remainder in that same year.

As a homeowner, you can also deduct the property taxes you pay each year. If you pay your taxes through an escrow account, this amount should be included on the annual statement you get from your lender, along with your loan interest information. These taxes will be an annual deduction as long as you own your home. You should keep records of all your payments if you don't have escrow. You're only allowed to deduct "actual" real-estate tax payments you've made or those made by the lender from your escrow account. If your settlement statement shows any money that you've paid in escrow for future taxes, this amount is not deductible.

For any mortgages issued in 2007, private mortgage insurance (PMI) costs are also considered an allowable deduction for home-buyers. This type of insurance is generally required when buyers don't put 20% down towards the cost of the home. PMI is set up to protect the lender if the you fail to repay your mortgage loan. As income increases above $50,000 on single returns and above $100,000 on joint returns, this write off starts to phase out. The full deduction is limited to homeowners with adjusted gross income of $100,000 or less. Keep in mind however, private mortgage insurance costs taken before 2007 are not deductible.

Homeowners can also claim a deduction on interest paid on a loan secured by their first or second home such as home equity loans. The interest you are allowed to deduct from your home equity loan is not unlimited. Generally, you can deduct interest that you pay on the first $100,000 of a home equity loan. If the loan was used to improve your first or second home or to purchase a second home, you'll probably be able to take the deduction on an amount up to $1 million dollars or the value of the home. IRS Publication 936 Section 2 contains more details on how all this works.

Penalty free IRA pay outs are yet another tax benefit for homeowners. If you're a first-time homebuyer, you can withdraw up to $10,000 from a traditional IRA early, without penalty (before 59 1/2 years old),  if you use the money to buy a first home for yourself, a child, grandchild, your parents or grandparents. Although the payout will avoid the standard 10% early withdrawal penalty, it will be taxed. The Roth IRA allows you to withdraw contributions at any time without penalty, making it a great way to save for your first home. For example, if you and your spouse each put $4,000 per year into a Roth for 5 years, the entire $40,000 could be withdrawn tax and penalty free to purchase your first home.

While many tax breaks are available to homeowners, there are a few items to keep in mind that that are not deductible. Homeowners insurance premiums, payments made on additional principal, homeowner association (HOA) dues, depreciation on your home, repairs needed after you move in, local assessments that increase the value of your neighborhood and general closing costs are all considered non tax-deductible items.

If you're thinking about purchasing a new home and are like most people, you'll also be shopping for the best interest rate on a mortgage to pay for it. Keep in mind that the interest rate quoted by a lender will seldom be just a straight percentage rate. More often, you'll receive a quote combining an an interest rate and “points.”

Points are one of the important factors in calculating the annual percentage rate for a mortgage. There are two different types of points, referred to as discount points and origination points.

Discount Points
When a borrower chooses to pay discount points, they are essentially paying upfront interest in a lump sum, in order to buy down their rate. The result is a reduction of long-term interest on their loan. Typically, points are typically equal to 1% of the loan amount. For example, on a $275,000 loan, the borrower would pay $2,750 per point to the lender upfront. The more points that are paid, the lower the interest rate. Typically borrowers can pay anywhere from 0 – 3 points. It all depends on how much they want to (or are able to) lower their interest rate. The advantage of this kind of point is that the IRS allows it as a tax deduction.

Origination Points (Fee)
The borrower is charged by the lender an origination fee, in order to cover the costs of making the loan. This type of point is considered tax deductible if used for the sole purpose of obtaining the mortgage and is not used to pay other closing costs. The IRS is very specific about what can and can't be  deductible. For example, points that are used for items such as preparation costs, notary fees, inspection fees or any other items that would typically be itemized on a settlement statement are not deductible. Origination Fee and Discount Points are both items listed under lender-charges on the HUD-1 Settlement Statement.

Choosing to Pay Points
Whether more points paid for a lower interest rate or fewer points paid for a higher rate is the best deal really depends on how you answer these two questions: Can you afford to make upfront payments for points and how long do you plan to stay in the mortgage? Ultimately, the longer you plan to stay in the the home, the wiser it is to pay the points upfront because of the long term benefit you derive from the lowered interest rate. Conversely, If you are short on cash and are not planning to stay in the home for long, then paying points would not be the best decision.

Break Even Period
This refers to the period in which the cost to you would be the same whether you paid points for a lower rate mortgage or chose low or zero points for a higher rate mortgage. To calculate this correctly, the costs need to include the points, monthly payments, lost interest earnings on the points and the investment rate - less tax savings and reduction in loan balance. You can use one of the handy online rate /point calculators to compare which deal makes the most sense for your needs.

Recouping Cost of Paying Points
Typically, it can take up to 5 - 7 years to recoup the cost of paying an upfront point. For example, you take out a $100,000 30-year fixed mortgage.You have the option of either paying 6% with no points or 5 3/4% with one point. With a 6% mortgage, your monthly payment would be $600. With a 5 3/4% loan, it would be $584 and a savings of $16 a month. After approximately 62 months, you'd have recouped the $1,000 point paid upfront. At this point, you would start to see the benefit of lower monthly payments.

As you can see, the best option depends on your individual financial situation. If you're like many first time home buyers, without a lot of upfront money and needing the lowest possible closing costs, you can choose to pay zero points on your mortgage loan program.

A Homeowners association (HOA) is an organization created to govern a private community by a developer or group of homeowners. The purpose of an HOA is to preserve the value of privately and commonly used property to a certain minimum standard of design and maintenence, in order to uphold the quality of living in a private community. For an HOA to fulfill its mission, enforced restrictions must be recognized by all its members without exception. An HOA is given the authority to enforce the covenants, conditions and restrictions (CC&Rs) of its by-laws and to manage the common amenities of the development. There are some common principles of most homeowners associations such as:

• Membership is automatic and mandatory when the property is purchased.
• All homes within the community must comply with specified design and maintenance standards.
• All owners and/or residents (renters) must comply with the rules of the HOA by-laws.
• Dues are assessed to all homeowners in order to maintain and operate the HOA.

For a homeowners association to act as positive force for its members, individual homeowners must abide by its rules and restrictions for the betterment of the entire community. Many potential home buyers perceive these restrictions as too limiting and choose not to purchase a home that has an active HOA in place.

Association board members are comprised of volunteer members of an HOA community. They're elected by the homeowners to represent the association and make decisions on their behalf. Like a town or city, the HOA provides services, regulates activities and can impose fines on its community members. HOA governing must comply to corporate law and is considered a private corporation. Homeowners associations can enforce actions of its by- laws through private legal action under civil law.

Covenants, Conditions and Restrictions CC&Rs

Limitations, referred to as covenants, conditions, and restrictions (CC&Rs) are the decision making rights put into the hands of an HOA. Rules and restrictions, even if they conflict with individual homeowner preferences, are set in place for the community as a whole.

Here are some example of limitations that an HOA can enforce on its members:

•  Landscaping and height of grass
•  Fence height and materials used
•  Exterior house paint color
•  Number of pets per household 
•  Number of cars allowed in driveway
•  Above ground pool restrictions
•  Trash cans set out only on specific days 
•  RV or boat parked in driveway
•  Window treatments visible from street
•  Satellite dish visible from street 
•  Basketball hoop in front of house

Some homeowner associations are akin to little towns with their own utilities, community recreational amenities (pool, tennis courts, walking trails), private roads, services, community buildings, and schools, which are maintained for exclusive use of its members. Each member of a homeowners' association pays assessments (dues or fees) that are used to cover its community expenses. It is estimated that assessments paid to HOAs amount to billions of dollars in the U.S. each year.

There are some risk factors associated with HOAs. In some states, a homeowners association has the authority to foreclose a member's house without any judicial procedure to collect unpaid fees and/or fines. Other states, like Florida, require a judicial hearing. Such a foreclosure without a judicial hearing can happen if there exists a power of sale clause in the mortgage.

HOAs can also collect special assessments from members in addition to set fees. Special assessments usually will require a homeowner vote if the amount exceeds a specific limit set forth in the HOA by-laws. Recently, AARP has shown concern that HOAs may be a possible risk to the financial welfare of their members. They've also suggested that a nationwide Bill Of Rights be adopted to protect senior homeowners from strong arming HOAs.

Every homeowner belonging to an HOA has an opportunity to participate in decisions being made for their community as well as the responsibility of making sure that the HOA complies with its own by-laws. The purpose of a homeowners association is not intended as a military regime of crazed watch-dogs dictating how its members live. A well administered homeowners association's purpose is to make decisions that enhance the value of the property it governs, while maintaining the integrity and lifestyle of the community as a whole. Many homeowners find HOAs beneficial and worth the extra fees associated with owning property.

Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. It begins when a borrower/owner defaults on loan payments and the lender files a public default notice or a lis pendens (Latin for "lawsuit pending"), depending on the state.

Ultimately, the foreclosure process can end one of four ways:

• • The borrower/owner pays off the default amount to reinstate the loan during a grace period known as pre-foreclosure
  
  
• • The borrower/owner sells the property to a third party during pre-foreclosure, allowing the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history
  
  
• • A third party buys the property at a public auction at the end of the pre-foreclosure period
  
  
• • The lender takes ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction.