Few people can buy a home for cash. According to the National Association of REALTORS® (NAR), nearly nine out of 10 buyers in 1999 financed their purchase, which means that virtually all buyers -- especially first-time purchasers -- required a loan.

The real issue with real estate financing is not getting a loan (virtually anyone willing to pay lofty interest rates can find a mortgage). Instead, the idea is to get the loan that's right for you -- the mortgage with the lowest cost and best terms.

REALTORS® routinely suggest that consumers start the mortgage process well before bidding on a home. Many lenders (the sources of money) and programs, for example, are available right here in the finance section of Homestore.com as well as through recommendations from local REALTORS®. By meeting with lenders -- either online or face to face -- and looking at loan options, you will find which programs best meet your needs and how much you can afford.

REALTORS® also recommend preapprovals for another reason: Purchase forms often require buyers to apply for financing within a given time period, in many cases, seven to 10 days. By meeting with loan officers in advance and identifying mortgage programs, it won't be necessary to quickly find a lender, check credit, and rush into a financing decision that may not be the best option.

What is it?
"Preapproval" means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a preapproval letter, which shows your borrowing power. You can visit as many lenders as you like and get several preapprovals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports.

Although not a final loan commitment, the preapproval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. This information is important to owners since they do not want to accept an offer that is likely to fail because financing cannot be obtained.

How do you get preapproval?
Real estate financing is available from numerous sources, including lenders here in the finance section of Homestore.com, mortgage companies that have worked with local REALTORS® and in some cases, individual REALTORS® themselves. Based on his or her experience, the REALTOR® may suggest one or more lenders with a history of offering competitive programs and delivering promised rates and terms.

The loan officer will carefully review your financial situation, including your credit report and other information. The lender will then suggest programs which most-closely meet your needs. For instance, a first-time buyer may qualify for state-backed mortgage programs with little money down and low interest rates, while a repeat purchaser (someone who has bought a home before) with more equity (money invested in the home) might want to get a 15-year loan and the lower overall interest costs it represents. Typically, first-time buyers opt for the traditional 30-year loan, with either a floating interest rate or a fixed rate of interest over the life of the loan.

By Mike Sheridan

You've done it. You've packed your belongings, said goodbye to friends and neighbors, moved to a new home and started your new job. So the hard work is done, right?

Not quite. There's an important item remaining: settling up with Uncle Sam.

U.S. and state tax codes are full of complicated rules, regulations and nuances that affect relocating individuals. With April 15 around the corner, it's important to obtain authoritative advice about the tax implications of moving expenses and determine how an employer's relocation disbursement can affect your income and deductible expenses.

Moving is big business: Relocation has become big business, with an estimated 40 million Americans moving every year. Increasingly, corporations are turning to tax relocation specialists because there are so many questions and subtleties involved.

For instance, if your employer provides you with a lump sum of $10,000 to cover moving costs, that amount is taxable and typically added to the individual's gross income.

Such reimbursement can place you in a higher tax bracket, says Robert Petty, director of marketing at ReloTax, (a subsidiary of Homestore.com) a financial services company. "Even relatively small errors in income tax preparation can distort gross income dramatically."

What can you write off? Deductible moving expenses can be tricky. For instance, transporting a second car or a boat could be deductible, as could expenses such as utility hook-up fees and mileage and lodging costs. It's areas like these where a tax relocation specialist can really help you.

"A local CPA firm usually isn't well versed in interstate relocation and could inadvertently take deductions that are incorrect and conceivably earmark an individual for an audit because of mistakes," explains Debbie Gioiella, director of operations at ReloTax. "That's why more and more companies are hiring professionals to work with their relocated employees."

A spokesman for one firm that uses ReloTax calls it "one of the best decisions we ever made. The company is familiar with our relocation policy and ReloTax professionals are knowledgeable with the tax laws of all states and localities. The result is we have satisfied transferred employees who can concentrate on their work and not be distracted by complexities of preparing a tax return complicated by a relocation."

One reason for this is ReloTax utilizes software that can compute multi-state taxation. "We point out all the deductions available, says Gioiella," so we have a better knowledge of what expenses can be deducted and what are the ramifications that affect each state."

More importantly, it brings tax closure to the financial aspects of the relocation process, Petty says. "It enables individuals to get on with their new job—and their new life."

One of the keys to making the homebuying process easier and more understandable is planning. In doing so, you'll be able to anticipate requests from lenders, lawyers and a host of other professionals. Furthermore, planning will help you discover valuable shortcuts in the homebuying process.

Do You Know What You Want?
Whether you are a first-time homebuyer or entering the marketplace as a repeat buyer, you need to ask why you want to buy. Are you planning to move to a new community due to a lifestyle change or is buying an option and not a requirement? What would you like in terms of real estate that you do not now have? Do you have a purchasing timeframe?

Whatever your answers, the more you know about the real estate marketplace, the more likely you are to effectively define your goals. As an interesting exercise, it can be worthwhile to look at the questions above and to then discuss them in detail when meeting with local REALTORS®.

Do You Have The Money?
Homes and financing are closely intertwined. (Financing is the difference between the purchase price and the downpayment, commonly referred to as debt or the mortgage.) The good news is that over the years new and innovative loan programs have evolved which require a 5 percent downpayment or less. In fact, a number of programs now allow purchasers to buy real estate with nothing down.

In addition to a down payment, purchasers also need cash for closing costs (the final costs associated with closing the loan). Several newly emerging loan programs not only allow the purchase of a home with no money down, but also underwrite closing costs.

Not everyone, however, elects to purchase with little or no money down. Less money down means higher monthly mortgage payments, so most homebuyers choose to buy with some cash up front.

As to closing costs, in markets where buyers have leverage, it may be possible to negotiate an offer for a home that requires the owner to pay some or all of your settlement expenses. Speak with local REALTORS® for details.