Before buying a home, it it important to decide how long you plan to live there.  A rule of thumb is that it rarely makes sense to buy if you expect to move within two years. That’s because when you do sell, there are costs associated with selling.  Buying a home when you expect to move before too long is a risk, especially in an uncertain market.

However, most buyers live in their new home an average of seven years or more. If that fits you, it almost always makes sense to buy rather than rent, in practically any market.

If you are thinking about delaying a purchase because you want to “time the market” to get the very best deal, that is almost impossible to do with precision. Even if you are in an area with declining market prices, the most knowledgeable experts cannot reliably anticipate the “bottom” of a real estate market. Afterwards, they can look back and say, “The market began to turn in 1997,” like it did in some areas of California that had a tough market in the nineties. Before the turn, though, no one knows.

If you aren’t an owner, you’re a renter. Renting is just throwing money away. You don’t get to reduce your income taxes by itemizing deductions like property taxes  and mortgage interest. 

Interest rates are low right now. If you wait, interest rates could be higher. That means your monthly payment will be higher, too. No one can predict rates that far in the future but rates are very low right now.

The easiest way to accumulate wealth is through home ownership. Three out of four people have more equity in their home than assets in retirement plans, stocks, mutual funds, and savings. Though no one can guarantee your property will appreciate, over time it generally does. Over the long term, you can generally count on it.

As a buyer, what do you need to do to give you the best bang for your buck?  First of all, determine your price range. Then choose a neighborhood where your target price is in the lower tier of prices in that neighborhood. That way, your home has less vulnerability on the down side and the higher-priced homes will help pull you up during hot markets.

Also, try to steer away from homes on busy streets or homes that back to busy streets. Buy a house as close to the center of the tract as possible. Don’t buy houses across the street from a park or a school. Try to buy in a homogeneous area, where all the homes are similar to one another. For example, if you are buying a single family home, you do not want to buy next to an apartment or condominium complex.

And remember, talk to a real estate agent and ask for advice. Ask them what the market is like in your area.

There are LOTS of sellers out there right now. Inventory is high. If you make an offer, ask for incentives to buy that particular home.

If you are putting ten percent down or more, you can ask for up to six percent of the purchase price in incentives. These incentives CANNOT BE CASH, but you can ask the seller to pay your closing costs. You can also take advantage of programs such as the Nehemiah Program that allows sellers to contribute 6% of the purchase price which includes your 3% down payment and 3% towards closing costs.  This program works if you qualify and are looking to get an FHA loan.

If you’re putting down five percent or less, you can still ask for incentives. The amount you can ask for is limited to three percent of the purchase price. The reason there are limits is because you are going to finance the purchase with a mortgage and lenders have guidelines on how much sellers can provide in incentives. Those guidelines help them limit loan fraud.

Talk to a real estate agent. Have that agent recommend a lender who will talk to you about incentives and explain what you can request.

With mortgage defaults surging and politicians urging the industry to do more, six lenders agreed to widen their effort to help borrowers of all loans - NOT just subprime.The plan, called Project Lifeline, is to be announced Tuesday by the Treasury Department and the Department of Housing and Urban Development.

The plan will allow seriously overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loans.

On a pilot basis, the plan will involve six of the largest mortgage lenders, in hopes that more lenders will sign on. The participants are Bank of America Corp. (BAC, Fortune 500), Citigroup Inc. (C, Fortune 500), Countrywide Financial Corp. (CFC, Fortune 500), JPMorgan Chase & Co. (JPM, Fortune 500), Washington Mutual Inc. (WM, Fortune 500) and Wells Fargo & Co. (WFC, Fortune 500)

All six are involved in Hope Now, a Bush administration organized effort to freeze rates on some high-cost subprime mortgages for five years to aid borrowers whose teaser rates are jumping sharply higher. Since then, Treasury Secretary Henry Paulson has urged lenders to expand that effort to cover struggling homeowners with conventional mortgages.

The new plan applies to seriously delinquent homeowners, those whose mortgages are 90 days or more past due.

The Hope Now alliance, which includes lenders, investors and nonprofit groups, said last week that it helped nearly 8% of subprime borrowers in the second half of 2007 - more than its original estimate.

The group said it helped 545,000 subprime borrowers with spotty credit in the second half of last year, compared with its January estimate of 370,000. That works out to 7.7% of 7.1 million subprime loans outstanding as of September 2007.

Among the subprime borrowers aided, 150,000 were helped through permanent-loan modifications, such as lower interest rates, while 395,000 negotiated repayment plans, which often involve a borrower getting back on track even after missing a few payments.

Consumer groups, however, point out that many borrowers still can’t keep up, even after loan workouts. They say many of the borrowers in the Hope Now effort have negotiated short-term loan modifications or repayment plans, which often involve a borrower getting back on track after missing a few payments. A full-fledged refinancing at a lower rate is preferable, they say. 

 Homeowners behind in payments will get 30 days to work out problems

cnnmoney.com