Smart Moves by Ellen James Martin

TAKING THE WORRY OUT OF LOOKING FOR A HOME

Rents are rising everywhere, but mortgage rates remain alluringly low. The combination is enough to entice many wannabe homebuyers into the market. But once there, some are haunted with misgivings and second thoughts.

"(Some prospective buyers) fear making a long-term mortgage commitment," says Ashley Richardson, a seasoned real estate agent who's affiliated with the Council of Residential Specialists (www.crs.com).

She tells the true story of a pair of clients who'd love to own a home. But they were obsessed with worries about the implications.

After a long and meandering property search, the couple finally settled on a new suburban townhouse. But after an anxiety-ridden two days, the couple phoned Richardson to say they were backing out of the deal during their right-to-rescind period.

Fast forward several months and the couple found another property, one that met all their needs. But they lost out on that house, as well, by submitting a lowball offer they knew would come in below that of rival bidders.

To calm their fears and frame a realistic view, Richardson advises nervous young buyers to consult others in their age group who've already bought a home.

Here are a few pointers for buyers:

-- Keep in mind your reasons for wanting to buy.

Fear is a powerful factor that can stop people from realizing their home-buying plans, even when logic tells them to go forward, says Sid Davis, a real estate broker and author of "A Survival Guide for Buying a Home."

"Obviously, no one has a crystal ball about real estate values or about rental rates. But everyone needs housing, whether that be rental or purchase. So if your dream is to own a home of your own ... you might kick yourself later if you let worry stop you," Davis says.

-- Seek the early backing of a reputable mortgage lender.

Though federal mortgage standards are gradually becoming less stringent, most lenders still go to great lengths to ensure that the loans they originate are solid. That means borrowers must be prepared to respond to their lender's request for documents.

As proof of income, many lenders now insist on more than the customary pay stubs and W-2s. For example, they'll likely ask for at least two years' worth of tax returns. Also, they'll probably want proof that the funds for your down payment have been in your savings or checking account for some time and weren't borrowed from your grandmother just last week.

In addition, a good lender will provide you lots of guidance on how to overcome hurdles -- like rectifying errors on your credit reports, Davis says.

The time you spend documenting your financial fitness to buy a home is well spent if the lender gives you a "pre-approval" letter, a vitally important tool as you negotiate for a property.

"Another advantage of pre-approval is that it helps you define your comfort zone on how big a mortgage you can afford. And that can help dispel your fears about overspending," Davis says.

-- Take a cautious approach to home selection.

Last year, many neighborhoods were short on property available for sale. But inventories are now gradually rising, and more would-be sellers are expected to surface as spring approaches. Davis says homebuyers always have good reasons to be choosy, though not irrationally so.

"Home-buying is like dating to find the right person to marry. You want to be open-minded. But you also don't want to look for a level of perfection that's impossible, because every house has flaws," Davis says.

Having lots of choices is a positive for buyers, but not if it promotes perpetual indecision that delays the realization of their goal. Those who find themselves delaying indefinitely may wish to work with an agent to formulate tighter screening criteria.

"Start with a list of maybe 10 or 12 houses in the best neighborhood you can afford. Then, gradually narrow that list to a shorter one. In the process, you'll learn more about what you're looking for," Davis says.

However, he cautions wariness about any agent who tries to convince you to buy a place that doesn't meet your core criteria, no matter how favorable the price.

-- Screen for homeowners eager to sell soon.

Tom Early, a real estate broker and past president of the National Association of Exclusive Buyer Agents (www.naeba.org), says that during all selling seasons there are some "test-the-market" sellers who have no urgent need to move. But there are also highly motivated homeowners who must move due to professional relocation, a financial setback or divorce.

"If a property is vacant, it's likely the sellers are eager," Early says.

Even if the home isn't vacant, there are ways to assess the sellers' level of motivation. Early says many owners, along with their listing agents, are remarkably frank.

"Some people are astoundingly candid about why they must move. They'll even tell you about their serious money problems or the breakup of their marriage. You don't need to pry, just ask why they're moving and they'll open up," Early says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)