The Family Home-Buying Guide

The economy's improving, but the housing market remains tricky. Our guide will help you avoid a costly mistake -- and find the perfect place for your clan.
Family Home Scene

Sol Linero

When my husband and I shopped for our first house two years ago, we fell -- hard -- for an 1890s-era four-bedroom with a sun-soaked first floor and a white picket fence in the backyard. Our offer was accepted, but then we started to have doubts. The master bedroom was in the attic, a floor above the others. If our girls, ages 3 and 1, had bad dreams, did we really want them climbing steep stairs at 3 a.m.? When the home inspection revealed multiple areas that needed significant work, we backed out of the deal. Today we live a few blocks away in a house that fits our family life perfectly. But it would have been easy to settle for the wrong one -- if we'd ignored our gut or felt pressured by the low inventory of available homes in our area.

With a recovering economy and still-low mortgage rates, parents with young kids are jumping into the housing market. Nearly four out of ten buyers today are first-timers. Making the switch from renter to owner can be a daunting process for newbies, though. There are numerous potential pitfalls, such as committing to a home you can't truly afford or ending up with a headache that requires costly renovations or repairs. Keep these five factors in mind before you take the plunge.

Pre-approval is a smart idea.

Taking this step means you've been tentatively approved for a mortgage of a certain size, giving you a sense of how much you can safely spend on a home. It also shows sellers that you're a serious contender, which can make a difference when you're bidding against other buyers. "There are two main things a seller wants to know about buyers: Are they willing to pay my price and can they close a deal if we agree?" says Dale Taylor, a Realtor in Chicago.

Start by using an online home-affordability calculator to determine how much money you can borrow. Then check BankRate.com for competitive rates in your area. Select a mortgage lender who is easy to reach, happy to answer your questions, and trustworthy (avoid anyone who pushes risky adjustable-rate mortgages). But don't feel committed to him. Once you're ready to proceed with an actual mortgage, call around and compare closing costs and any bonuses or rebates being offered. You might also consider the terms a local bank or a savings and loan offers. Before locking into our mortgage, I found two companies promising incentives worth $1,000. I took these to our initial lender and -- boom! -- got a discount of $1,100.

Your emotions belong on the back burner.

Colleen Rustad loved her future home in Petaluma, California, at first sight, from the towering pine trees to the sleek kitchen cabinets. Then she and her family moved in. "As I was unpacking on moving day, I realized that the striking design features that caused my heart to skip a beat were going to be hugely impractical to live with," says Rustad. The lowest kitchen shelf was 6 feet off the ground, which meant she needed a stepladder to reach things and her 5-year-old couldn't retrieve his own plate. While the house's location at the top of a hill seemed appealing initially, it made teaching the kids to roller-skate a truly terrifying experience.

Half of all homeowners have at least one regret about their current home, according to a survey by real-estate site Trulia.com. Don't make a purchase without considering all the angles. You might adore that three-bedroom colonial, but keep looking if it has zero closet space or backs up to a busy highway. You should also be thinking long-term: Will the perfect-for-now layout still work when your kids are teens?

In that same survey, one third of owners with buyer's remorse wished they'd put more money down or waited until they were in better financial shape. So if you're bidding on a home that's $20,000 out of your price range, don't strain your finances. You'll need to pay back that extra loan with interest. "Many buyers sign up for a mortgage that's higher than they planned," says Greg Cook, a first-time-homebuyer specialist with Platinum Home Mortgage, in Temecula, California. You don't want to live so close to the margin that a temporary money hiccup could prevent you from making your monthly payments.

Babyproofing Your Home: Stairs
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