Opportunity Knocks: Buy or rent? And what help is out there?

Q: Is it better to buy a home rather than renting?

A: Real estate is still one of the best options for a long-term investment. Markets constantly swing, and even drops in values eventually recover. Today's market is an excellent time to invest in a home.

Q: Should I worry about getting a loan before I find the house I want to buy?

A: In today's lending environment, with tighter credit policies and increased lending restrictions, obtaining credit approval before looking for a home gives you greater knowledge about the price range to shop and credibility when you make an offer on a home. At a very minimum you should at least get pre-qualified by a lender. Although pre-qualification does not have the same level of credibility as credit approval, it will inform you of purchase price parameters and potential credit issues.

Q: I've never bought a home before. Are there programs to help me?

A: In today's market, government loans such as FHA, VA or USDA are probably the best programs for first-time buyers with limited down payment and closing funds.

Q: I used to own a home but sold it five years ago. Do I qualify for any special help?

A: If you have not owned a home for three years or more, you may be considered a first-time homebuyer, and could potentially be eligible for some first-time buyer incentives such as the current $8,000 tax credit offered in the Obama program.

Q: What credit score do I need to have to qualify for a mortgage?

A: This is a difficult question to answer since required scores vary greatly with the lending program being used and the banks offering the lending program. Generally speaking, minimum scores should be somewhere between 620-640 for most government programs. This is another reason why it is important to obtain credit approval or to be prequalified.

Q: How much house can I really afford on my income?

A: Although there are qualifying guidelines that vary from loan program to loan program, the reality is what you can afford should be customized to your particular income situation and comfort of payment. Nevada regulations now mandate that at the time of application lenders are required to discuss affordability and employment status in relation to the financial obligation of a home purchase.

Q: What are closing costs and what can I expect to pay?

A: Closing costs consist of the various fees charged by the lender, title company and other items involved with the settlement of your loan. A very general rule of thumb in estimating closing costs is to calculate 3 percent to 3.5 percent of the loan amount. Lending regulations require that a Good Faith Estimate of Closing Costs be furnished to you by your lender in the beginning stages of your loan application.

Q: How does owning a home affect my taxes?

A: In most cases the interest paid on your mortgage loan is tax deductible. To completely determine the tax advantage of homeownership, you should discuss your individual circumstances with your tax consultant.

• Tony Zehring is with American Mortgage Brokers, Carson City