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As housing market warms, keep these buying tips in mind

(BPT) - Ready to buy your first home, or move up to a larger home for your expanding family? Home sales seem to be finally warming up after a five-year...

(BPT) - Ready to buy your first home, or move up to a larger home for your expanding family?

Home sales seem to be finally warming up after a five-year chill, as demand gradually builds among first-time homebuyers and existing homeowners seeking more room. Historically low mortgage rates, rising rents and relatively positive economic indicators are enhancing consumer confidence and driving the trend, according to the National Association of Realtors (NAR).

As demand grows, home prices for a median existing home are expected to rise as much as 5 percent nationwide in 2013, according to the NAR. This should encourage existing homeowners who've been patiently sitting on the sidelines to consider putting their homes on the market.

Even though the outlook is looking brighter, Daniel Watkins, an attorney who specializes in real estate law at the Watkins Firm, APC in San Diego, says the hurdles to buying a home in today's market are significantly higher than they were a few years ago.

'The big hurdle is financing. Expectations among lenders and sellers are a lot higher today,' Watkins says. 'If you're serious about buying a home, you need to have a sizeable down payment, a good credit score, low debt and a solid track record of employment to qualify for a loan.'

Lenders are paying close attention to buyers' ability to repay a loan, according to FindLaw.com, the nation's leading legal information website. The generally accepted principle is that no more than 30 percent of a household's take-home income should go toward the principal, interest, taxes and insurance.

Here are some tips from FindLaw.com about buying a home within the next six to nine months:

Start planning now. Even if you're a year or more away from buying a home, start preparing now. Build up your cash for a down payment plus other expenses that come with owning a home. Check your credit report for accuracy. Pay all your bills on time and zero out all credit card debt. And don't take on new debt, like a large car payment.

Get a pre-approval letter. Home sellers want to know that you can get a loan to buy their home. It's OK to window shop, but don't make any offers unless you are certain you can obtain financing. After shopping around for a financial institution, get pre-approved for a home mortgage. Showing a seller a pre-approval letter will increase your chances of your offer being accepted. And don't be surprised if the seller or his real estate agent contacts your loan officer to verify that you've been pre-approved.

Build a strong buying position. As the home market warms up, bidding wars will become more common. However, the highest bid doesn't always win in today's housing market. Instead, home sellers want to know the deal will go through with smooth sailing. So, today, the highest value is being placed on non-contingent offers (not contingent on the sale of your home), pre-approved financing, higher-than-normal earnest money deposit and personalized bids (share with the seller why the home would be a perfect match for you and your family).

Get a lawyer. In some states, the law requires that a real estate attorney be part of the process of making an offer and reviewing loan documents as part of the closing, according to FindLaw.com. Where a real estate attorney isn't required, buyers and sellers should consider seeking legal assistance for relatively more complicated real estate transactions, such as purchasing a property directly from the homeowner, the purchase of a rental property, a short sale or the purchase of a foreclosed property.

Learn about the neighborhood. When you buy a home, you're also buying into a community. Start your home search by first targeting a neighborhood where you want to live. Avoid neighborhoods where homes are not being kept up, or yards are full of old cars and junk. Check out the schools, too. Great schools attract families, and keep up home values. Avoid busy streets, homes under flight patterns or near railroad tracks. And contact the local police department for crime statistics and the location of nearby sex offenders.

Keep your emotions in check. If you've found a home you like, don't fall in love with it yet. Make sure your offer is contingent upon a satisfactory home inspection conducted by an inspector that you hire (not the seller).

Save some extra money. Whether you're buying your first home or your third, moving and getting a household established can cost more than you anticipated. Make sure you save enough extra money to redecorate your new home to fit your lifestyle, and to pay for unexpected repairs.

To get more information about buying a home, visit www.findlaw.com.

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