Introduction 1 About This Book: The Eric Tyson/Ray Brown Difference 2 Icons Used in This Book 2 Beyond the Book 3 Where to Go from Here 4 Part 1: Getting Started With Buying A Home 5 Chapter 1: Deciding Whether to Buy 7 Weighing the Advantages of Owning versus Renting 8 Ownership advantages 9 Renting advantages 14 The Pitfalls of the Rent-versus-Buy Decision 16 Renting because it seems cheaper 16 Fretting too much over job security 16 Buying when you expect to move soon 17 Succumbing to pushy salespeople 17 Ignoring logistics 17 Overbuying 18 Underbuying 18 Buying because it''s a grown-up thing to do 19 Buying because you''re afraid that escalating prices will lock you out 19 Misunderstanding what you can afford 20 Chapter 2: Getting Your Financial House in Order 21 Surveying Your Spending 22 Gathering the data 22 Analyzing your spending numbers 27 Reckoning Your Savings Requirements 28 Setting some goals 28 Retirement-savings accounts and a dilemma 29 Other reasons to save 31 Protecting Yourself, Your Dependents, and Your Assets 32 Insuring yourself 33 Insuring your assets 34 Invest in Yourself 36 Chapter 3: What Can You Afford to Buy? 37 Lenders Can''t Tell You What You Can Afford 38 The Cost of Buying and Owning a Home 39 Mortgage payments 39 Property taxes 48 Insurance 49 Maintenance and other costs 50 The tax benefits of homeownership 51 Closing Costs 54 Accumulating the Down Payment 57 The 20 percent solution 57 Ways to buy with less money down 58 Where to invest the down payment 60 Chapter 4: Why Home Prices Rise and Fall 67 What Drives Real Estate Markets and Prices? 68 Jobs, glorious jobs 70 Available housing 71 Inventory of homes for sale and actual sales 72 The rental market 74 Tax rules and changes 75 How to Get a Good Buy in Any Market 76 Seek hidden opportunities to add value 77 Buy when others are scared to buy 78 Find a motivated seller 78 Buy during slow periods 79 Become a great negotiator 80 Buy in a good neighborhood 80 Part 2: Financing 101 81 Chapter 5: Understanding and Improving Your Credit Score 83 The Record You Can''t Ignore: Your Credit Report 84 What your credit history comprises 84 What goes into your credit report 85 Why you should check your credit report 85 The Most Popular Kid on the Block: FICO Scores 86 How scores work -- the short version 87 How a FICO score assesses your credit history --the long version 88 What FICO scores ignore 95 Why your score is what it is 96 Getting Hold of Your Report and Score 96 Chapter 6: Selecting a Mortgage 99 Getting a Grasp on Mortgage Basics 99 Fixed or Adjustable? That Is the Interest(ing) Question 100 Distinguishing fixed-rate mortgages from adjustables 100 Looking at hybrid loans 102 Starting out risky: Interest-only mortgages 102 Making the fixed/adjustable decision 104 Deciding on your loan''s life: 15 years or 30? 109 Finding a Fixed-Rate Mortgage 111 The all-important interest rate 111 The finer points of points 112 Other lender fees 114 Arriving at the Absolute Best Adjustable 115 Where an ARM''s interest rate comes from 116 How often does the interest rate adjust? 118 Limits on interest-rate adjustments 118 Locating the Best, Lowest-Cost Lenders 120 Shopping on your own 120 Working with a mortgage broker 123 Chapter 7: Mortgage Quandaries, Conundrums, and Forms 129 Overcoming Common Mortgage Problems 129 Insufficient income 130 Debt and credit problems 130 Dealing with Appraisal Problems 133 You''ve overpaid 134 The appraiser doesn''t know your area 134 The appraiser/lender is sandbagging you 135 Those Darn Mortgage Forms 135 The laundry list of required documents 136 Permissions to inspect your finances 139 The Uniform Residential Loan Application 140 I Borrower information 142 II Financial information -- Assets and liabilities 145 III Financial information -- Real estate 147 IV Loan and property information 148 V Declarations 149 VI Acknowledgments and agreements 150 VII Demographic information 152 Other typical documents 152 Part 3: Property, Players, And Prices 155 Chapter 8: Where and What to Buy 157 Location, Location, Value 159 Characteristics of good neighborhoods 160 Selecting your best neighborhood 161 Fundamental Principles for Selecting Your Home 163 The principle of progression: Why to buy one of the cheaper homes on the block 163 The principle of regression: Why not to buy the most expensive house on the block 165 The principle of conformity: Why unusual is usually costly 166 Defining Home Sweet Home 167 Detached residences 167 Attached residences 173 Finding a Great Deal 183 Finding a fixer-upper 183 Taking over a foreclosure 187 Seeking a short sale 190 Pooling Your Resources: Ad Hoc Partnerships 193 Types of residential co-ownership 193 Structuring a successful co-ownership 195 Chapter 9: Assembling an All-Star Real Estate Team 197 The Team Concept 198 Lining up the players 198 Avoiding gratuitous advice 199 Reeling in a Real Estate Agent 200 Types of agent relationships 201 How agents get paid 204 Characteristics of good agents 205 Selecting your agent 207 Getting the most from your agent 215 Bagging a Broker 217 Landing a Lender 219 Procuring Property Inspectors 219 Electing an Escrow Officer 220 Finding (or Forgoing) Financial and Tax Advisors 221 Looking for Lawyers 223 Selecting your lawyer 224 Getting the most out of a lawyer 225 Chapter 10: What''s It Worth? 227 Preparing to Tour an Endless Parade of Homes 227 The Three Elusive Components of Worth 228 Value is a moving target 229 Cost is yesterday 229 Price is what it''s worth today 231 Fair Market Value 232 When fair market value isn''t fair -- need-based pricing 232 Median home prices versus fair market value 234 Determining Fair Market Value: Comparable Market Analysis 235 The basics of a helpful CMA 236 The flaws of CMAs 240 Getting a Second Opinion: Appraisals versus CMAs 242 Why Buyers and Sellers Often Start Far Apart 243 Inept agents 245 Unrealistic sellers 246 Chapter 11: Tapping the Internet''s Best Resources 247 Finding Useful Information 248 Get your feet wet at Realtor.com 248 Discover more at these sites 248 Doing Some Preliminary Shopping 249 Surveying homes for sale 250 Watching out for sites promoting foreclosures 250 Sifting through school information 252 Perusing "best places" to live 252 Familiarizing yourself with financing options 253 The Drawbacks of Searching for Houses in Cyberspace 254 Conflicts of interest 254 Bankruptcies 254 Misleading home-valuation tools 255 Untrustworthy mortgage calculators 255 Part 4: Making The Deal 257 Chapter 12: Negotiating Your Best Deal 259 Understanding and Coping with Your Emotions 260 Examining the violent forces at work 260 Controlling yourself 261 The Art of Negotiating 263 Being realistic 264 Examining your negotiating style 265 Negotiating with finesse 267 The Negotiating Process 269 Making an offer to purchase 269 Leaving an escape hatch: Contingencies 271 Getting a counteroffer 272 The Finer Points of Negotiating 275 Negotiating when the playing field isn''t level 275 Spotting fake sellers 277 Lowballing 280 Negotiating credits in escrow 283 Chapter 13: Inspecting and Protecting Your Home 287 Conducting Thorough Inspections 288 All properties should be inspected 288 The two types of defects: Patent and latent 290 Patent defect red flags 290 Types of property inspections 291 Inspecting inspectors 293 Insuring Your Home 299 Homeowners insurance 300 Title insurance 302 Chapter 14: It Ain''t Over till the Weight-Challenged Escrow Officer Sings 309 An Escrow Is a Good Thing 310 Know thy escrow officer 310 Cover all the bases 311 ''Tis the season: December escrows 315 Follow through 317 How You Take Title Is Vital 318 Joint tenancy 318 Community property 319 Tenants-in-common 319 Getting help drafting an agreement 319 Getting Possessive 320 Moving day 320 Final verification of condition 322 Coping with Buyer''s Remorse 322 Part 5: The Part Of Tens 325 Chapter 15: Ten Financial "To Do''s" After You Buy 327 Stay on Top of Your Spending and Saving 328 Consider Electronic Mortgage Payments 328 Rebuild Your Emergency Reserve 329 Ignore Solicitations for Mortga.