In addition to low interest rates, there are other benefits to buying at the end of the year, including:

• Tax savings. Closing on your new home by Dec. 31, 2003, means you can deduct mortgage interest, property taxes and points on your loan on your 2003 income tax return. You can also deduct the interest costs associated with a home equity loan. These deductions are significant, especially in the early years of your loan when you are paying off so much interest.
  
• Sellers might be more motivated. Many sellers will also be anxious to sell by the end of the year so that they, too, can enjoy tax savings on the next home they purchase. That means you may have more leverage during negotiations and they may be willing to accept lower than their listing price. However, if you're in a strong seller's market, you'll want to be conservative -- and always heed the advice of your real estate professional.
  
• If you're buying a new house, there's a good chance builders will be offering incentives. Many builders will throw in nice little extras to sell as many houses as they can by the end of the year.
  
• It's easier to move. Many moving companies are booked six or so weeks in advance during the busy summer months. In the fall and winter it's normally easier to secure the services of a moving company or rental equipment on shorter notice.
  
• A new home for the holidays. The holiday season is a great time to celebrate your new home with family and friends.

In addition, you'll enjoy the many benefits that come with homeownership, regardless of what time of year you buy, including:

• Paying toward something you own. If you're renting, your rent payment goes toward something that will last you a month -- a place to live for 30 or so days. When you buy a house, your monthly mortgage payment goes toward something you own.
  
• Consistent payments. Landlords have the discretion to increase your rent, plus it's exposed to inflation. Once you secure a mortgage, you can rely on consistent payments (if you have a fixed-rate mortgage).
  
• A place to make your own. When you own your house, you can update your kitchen, paint your home's exterior in any color you choose, change your fixtures, and replace your carpeting -- all with the knowledge that the changes you make are your own.
  
• Gaining equity. In the beginning, most of your payment goes toward interest. But gradually more will go toward paying off your principal, meaning you build up equity -- or savings -- in your home. Another factor in equity is appreciation. As home values go up in your area, so too does your rate of equity.

2. Important Things To Avoid Before Buying a Home - Back

Don't go it alone. It's wise to have your own buyer's agent and attorney. Don't rely on the seller's real estate agent, no matter how nice. Remember, that agent's loyalty is to the seller. Shop for an agent experienced in representing buyers, especially if you plan to look at homes for sale by the owner (FSBO). That owner may not know about certain restrictions and disclosure laws, is "conveniently" forgetting them, or just doesn't care about them. Buyers' agents often have such abbreviations on their business cards as ABR (Accredited Buyer Representative), CBR (Certified Buyer Representative), or CEBA (Certified Exclusive Buyer Agent). The secret is to retain the agent before the search starts. Shop also for an attorney, if you're going to use one -- and if you're a first-timer this is not a place to save a few hundred dollars. Get references from friends and neighbors and the real estate agent you've chosen. Meet with the attorney before you start house hunting. All too many buyers retain an attorney after they've already signed a contract. Bad move.

Don't go buying a lot of junk. Or even quasi-junk. Draining your savings or running up credit card debt to buying a new living room set, a big-screen TV or a new car could make a difference in your interest rate and whether you even qualify for a mortgage. Avoid spending money until after the closing is completed, whether by credit card or with cash. Keep debt down and as much money in your bank account as possible. The lender will check bank and credit card accounts.

Don't change jobs. Unless it can't be avoided through such things as drastic location changes, the experts say it's best not to change your employment picture until after closing. A worse move yet is to change from a salaried position to self-employment. Lending institutions like to see steady employment and generally insist that self-employers show two years of successful income.

Don't be too trusting. Just because the real estate agent seems caring and knowledgeable, don't forget, they work on commission. Don't put your life completely in someone else's hands. Only you can protect yourself. All too many home buyers place too much trust in others -- agents, the seller, title agencies, etc. Do your homework, become familiar with the entire home buying process and protect your own interests.

Don't mess up your credit. Don't go running around "fixing up your credit" without talking to a professional. You may think you're going to bump your score up a few notches by canceling a bunch of credit cards, for example. But canceling the wrong ones for the wrong reasons can seriously damage your credit score. Credit experts say it's important not to have too few or too many open credit accounts, and the best credit is old credit. Another possible pitfall is to transfer all your credit card balances to one card to get zero balances on the others. Your credit score actually will be higher in most cases if your balances are spread out across several cards.

Similarly, don't pay your bills -- at least not all of them. Paying credit cards down to below 50 percent of the your credit limit is generally helpful to boosting your score, but paying off all your debts is only wise if you still have enough cash when it's over to take care of your down payment, closing costs and prepays. In other words, don't deplete you entire savings to pay off your credit cards.

Don't think about lying. Lenders want to know how much cash you have to put into the house -- truthfully. If you're borrowing the money for a down payment and have to pay it back, it will have an effect on your ability to meet all your obligations. If it's a gift and doesn't have to be paid back, that's fine. But whatever you do, don't borrow it from your uncle and tell the mortgage banker it's yours -- the bank may ask you to document how long you've had it in that bank and where you got it from. A lie could backfire and ruin your whole deal.

Don't do any spring cleaning. Don't throw out bills, bank statements, or tax returns. A better idea than cleaning out is organizing all your important papers that may well be requested by a lender, such as W-2s, 1099 income statements, recent pay stubs and tax returns for the past couple of years if you're self employed. While you're at it, round up your prior title insurance policy, and any canceled checks, settlement statements or other proof that you paid collections or disputed accounts.

3. Art of house Hunting - Back

Armed with your down payment and your pre-approved mortgage loan, the next step is finding the house that will best meet your family's needs. With realistic expectations, patience, and plenty of research, you'll be well on your way.

Once you narrow it down to the neighborhoods you like, you'll want to determine the maximum house price you can afford. Even though you're pre-approved for a set loan amount, it doesn't mean you can afford it. You'll want to factor in other expenses, including retirement and college savings, vacations, and home maintenance and repairs, when you calculate how much you can afford for a monthly payment. And don't forget to budget for homeowners insurance and property taxes.

Next, differentiate your needs versus your wants. You need three bedrooms, but a fourth room would be nice for a play room or guest room. You need a two-car garage, but a larger one would be nice for storage. You need a functional kitchen but want hardwood floor. You need two bathrooms but want a luxurious master suite. You get the picture.

As you begin on your house-hunting venture, you may want to prepare a checklist, perhaps in a table form on your computer. Break it down between exterior and interior characteristics. Make notes on each feature and give each a 1 to 10 score.

Some of the exterior features to rate might include size of yard, quality of fence, paint condition, roof condition, window conditions, garage, back yard. When it comes to interior, think about square footage; the floor plan; condition of walls; the size, quality, and functionality of the various rooms; and closet and storage space.

Your checklist should also include any other general factors you deem important - the amount of traffic, the appearance of the neighborhood in general, safety in the area, the reputation of local schools, etc.

Meanwhile, Freddie Mac, the stockholder-owned corporation chartered by Congress in 1970 to create a continuous flow of funds to mortgage lenders in support of homeownership and rental housing, and other industry experts make additional suggestions, including:

Take a camera with you to capture an image of each house you look at that makes it to the "maybe" list.

• Don't make a hasty decision, especially if you feel yourself becoming guided by emotion. Selecting a home takes time, thought, and analysis. You should carefully weigh the pros and cons of each house you like.
  
• Review your checklist and notes and compare it against your needs, wants, and budget.
  
• Bring your spouse, friend or family member with you to get a second opinion. They may notice a shortcoming that you've overlooked.
  
• Find out how much utilities and maintenance cost.
  
• Stay on top of newly listed houses via a Multiple Listing Service on the Internet.
  
• Remain in close contact with your agent. This is extremely important if you're in a strong seller's market in which homes that are priced right go fast. You want a good agent who will alert you of new listings and who will show you the houses as soon as they're listed.
  
• Be prepared to look at the potential of a house rather than what you see in front of you. Set your priorities and decide what can be sacrificed. It's more important that the layout of the house and the number of bedrooms you need fit your needs and that all major systems are functional versus your dislike for the avocado green carpet or the lack of landscaping. Those types of cosmetic shortcomings can be easily remedied once you buy the house.

If you find a house you like, offer a competitive bid. Keep in mind you'll likely be competing against other offers - especially if interest rates stay low and the spring buying season is in full bloom.

And don't forget - once you make an offer, make it contingent upon the findings of a professional home inspection. If any major defects surface, you'll want to have the leverage to renegotiate or back out of the deal completely.