1. How does FHA work?

The U.S. Department of Housing and Urban Development offers a variety of loan insurance programs through the Federal Housing Administration, which require approximately 3 to 5 percent cash down.  FHA loan limits vary depending on the county where the property is located.  Private lenders originate FHA loans administered by HUD.  For more information, contact lenders who offer FHA loans or a regional HUD office.

2. Which lenders offer FHA loans?

Lenders who handle Federal Housing Administration loans typically advertise in the Yellow Pages under "real estate loans" and in the real estate sections of newspapers.  FHA also supplies limited lists of approved lenders.  For general qualifications and program details, see the FHA brochure, "How to Qualify for an FHA Loan."

3. Are there low-down-payment home loans?

A host of private lenders offer low-down-payment loans.  In addition, there are government programs to help cash-strapped buyers.

The U.S. Department of Housing and Urban Development offers a variety of programs through the Federal Housing Administration that requires approximately 4 to 5 percent cash down.  Loan limits vary depending on the county where the property is located.

Fannie Mae's Community Home Buyers program allows people to buy with just 3 percent down.  For details, contact lenders who offer government-insured loans.

4. Where are fixer-uppers found?

You can find distressed properties or fixer-uppers in most communities, even wealthier neighborhoods.  A distressed property is one that has been poorly maintained and has a lower market value than other houses in the immediate area.

Ascertaining whether the property you're interested in is a wise investment takes some work.  You need to figure what the average house in a given area sells for, as well as what the most desirable houses in that area are like and what they cost.

Some experts suggest that buyers who take this route try to find a "cosmetic fixer" that can be completely refurbished with paint, wallpaper, new floor and window coverings, landscaping and new appliances.  You should avoid run-down houses that need major structural repairs.  A house price that looks too good to be true probably is.  A smart buyer will find out why before buying it.

The basic strategy for a fixer is to find the least desirable house in the most desirable neighborhood, and then decide if the expenses needed to bring the value of that property up to its full potential market value are within one's rehab budget.

5. What home-buying costs are deductible?

Any points you or the sellers pay for your home loan are deductible for that year.  Property taxes and interest are deductible every year.

But while other home-buying costs (closing costs in particular) are not immediately tax-deductible, they can be figured into the adjusted cost basis of your home when you go to sell (any significant home improvements also can be calculated into your basis).  These fees would include title insurance, loan-application fee, credit report, appraisal fee, service fee, settlement or closing fees, bank attorney's fee, attorney's fee, document preparation fee and recording fees.

6. What exactly is bad credit?

There are numerous types of credit report problems that would cause a lender to reject your application for a loan.

Such problems include;
§ Missing a credit card payment,
§ Defaulting on a prior loan,
§ Filing for bankruptcy in the past seven years,
§ Not paying your taxes,
§ A judgment filed against you, or
§ Any collection activity.

If you feel that your credit report is wrong, experts say it's best to take it up with the organization or company claming you owe them money.

7. How does someone sell a slow mover?

Even in a down market, real estate experts say that price and condition are the two most important factors in selling a home.

The first step is to lower the price.  Also, go through the house and see if there are cosmetic defects that you missed and can be repaired.

Secondly, home sellers should make sure that the home is getting the exposure it deserves through open houses, broker open houses, advertising, good signage, and a listing on the multiple listing service (MLS).

Another option is to pull the home off the market and wait for the market to improve.

Finally, frustrated sellers who have no equity and are forced to sell because of a divorce or financial considerations could discuss a short sale or a deed in lieu of a foreclosure with the mortgage lender.

A short sale is when the seller finds a buyer for a price that is below the mortgage amount and negotiates the difference with the lender.

In a deed-in-lieu-of-foreclosure situation, the lender agrees to take the house back without instituting foreclosure proceedings.  But these would be considered more radical options than lowering the price.

8. What are the benefits of seller financing?

Seller financing offers benefits to both buyers and sellers including tax breaks for the seller as well as offering an alternative when conventional loans can't be found.

The risks involved are the same risks facing any lender.  Is the borrower a good credit risk?  Will the property hold enough value over time to allow for the repayment of all loans made against it?

Sellers should run a full credit check on the borrower, require hazard insurance on the property and include a due-on-sale clause.  There also are financing, disclosure and repayment-term requirements that should be met.

9. How is the price set?

It is very important to price your home appropriately relative to current market conditions.  Because the real estate market is continually changing, and market fluctuations have an effect on property values, it's imperative to select your list price based on the most recent comparable sales in your neighborhood.

A comparative market analysis provides the background data on which to base your list-price decision.  Study the comparable sales material presented to you by the different agents you interviewed initially.  If the analyses are more than two or three months old, have your agent update the report for you.

If all agents agreed on a price range for your home, go with the consensus.  Watch out for an agent whose opinion of value is considerable higher than the others.

10. What is the best time to sell your house?

In addition to supply and demand, and other economic factors, the time of year you choose to sell can make a difference both in the amount of time it takes to sell your home and in the ultimate selling price.

Weather conditions are less of a consideration in more temperate climates, but most of the time, the real estate market picks up as early as February, with the strongest selling season usually lasting through May and June.

With the onset of summer, the market slows.  July is often the slowest month for real estate sales due to a strong spring market putting possible upward pressure on interest rates.  Also, many prospective homebuyers and their agents take vacations during mid-summer.

Following the summer slowdown, real estate sales activity tends to pick up for a second, although less vigorous, fall market, which usually lasts into November when the market slows again as buyers and sellers turn their attention to the holidays.

Sellers often wonder whether or not they should take their homes off the market for the holidays.  Generally speaking, you'll have the best results if your house is available to show to prospective buyers continuously until it sells.