Home buyers are an increasingly rare breed these days. Many who were eager to buy a house raced to take advantage of federal homebuyer tax credits. When those government perks expired in April, home sales essentially went into deep freeze, plummeting to levels not seen in more than a decade, according to the latest numbers from the National Association of Realtors.

Still, the Realtors project that nearly 4 million existing homes will sell in 2010. First-time buyers, without the burden of a home to sell, could benefit from the foul market–and the record low mortgage rates.

But woe to the overconfident buyer. Here are five common missteps that first-time home buyers make.

Read about the mistakes to avoid when buying a home here…..

You’re finally wrapping up your home purchase. Congratulations. Before it’s officially yours, though, you have one last hurdle: the mysterious process known as “closing” or “settlement.” Open your wallet and hold onto your hat.

“Closing costs” — the catch-all term for a host of fees, taxes and charges — can total 2% to 6% or more of your purchase price — $4,000 to $12,000 on a $200,000 mortgage. That means you’ll need to budget a chunk of money besides your down payment.

Costs vary by region and by what you negotiate. Buyers usually pay most fees, but sellers may pay some, too. Buyers often get lenders to contribute, too. Be aware, however, that lenders offering a “zero-closing-cost” loan usually charge a higher interest rate.

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The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno.

Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.

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PITI – What Is It?

During your house hunting you will probably hear this term used a lot. It stands for principal, interest, taxes and insurance.

Every loan includes principal and interest payments and those labeled PITI also include taxes and insurance. Property taxes and homeowners insurance payments can be paid in an annual lump sum. These payments are instead spread out over the year and included in each mortgage payment.

Because mortgages are paid off over a period of fifteen to thirty years, the monthly payments comprise all or some of the following five components:

• Principal – the actual loan balance.
• Interest – the interest you owe on that balance.
• PMI – Private Morgage Insurance
• Real Estate Taxes – assessed by different government agencies to pay for school construction, fire department service and other facilities.
• Property Insurance – insurance coverage against theft, fire, hurricanes and other disasters.

With PITI you essentially ‘escrow’ your tax and insurance payments, meaning that the amounts are added on to your monthly mortgage payment so that they are covered when the tax or insurance bill comes in. You can also opt to pay the latter in full when they come due rather than in monthly installments to the escrow account which is also known as an ‘impound’ account.

Your monthly principal and interest charges are determined by the rate and the amount of the loan. The rate and loan amount, in turn, are affected by several factors. The rate depends on your credit score, discount points you pay and whether the down payment is less than 20 percent. The loan amount depends on the size of the down payment and the home’s price.

There is also the matter of mortgage insurance, which is levied on borrowers who make a down payment of less than 20 percent.

What determines your mortgage payment?

Mortgage lenders closely scrutinize your financial history to determine whether to approve your loan application.

Of primary concern are:

• Your credit report, which details your payment history on all loans, bankruptcy filings and other financial information.
• Your credit score, which uses your credit report to arrive at a numerical representation of your overall creditworthiness.

Credit scores (sometimes called FICO scores, after Fair Isaac Corp., the firm that created the most commonly used form) range from the 300s to about 900, with most homebuyers falling in 600s and 700s. Bankrate and FICO offer a free way to approximate your credit score via the FICO Score Estimator.

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Homebuyers with little money for a down payment are finding more home loans available for a low down payment or even no down payment.

These mortgages are becoming more commonplace even as the country recovers from a housing bust made worse by the popularity of low-down-payment mortgages during the housing boom.

The Federal Housing Administration insures loans with small down payments. And private mortgage insurers have lowered their down payment requirements.

Following are a few options for borrowers seeking low-down-payment and zero-down-payment home mortgages:

Click here to continue reading 4 Mortgages That Require Little Money Down….

We’ll keep you posted on additional changes or additions to benefit programs for home buyers as they become available.

A combination of government incentives and near record-low mortgage rates has prompted legions of first-time homebuyers to take the plunge. Buying a home can be exciting, yet daunting because it’s a complicated process with potential pitfalls at every step. But, it doesn’t have to cause anxiety if you plan and find the right professional help.

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