For most of us, the largest investment we will make is most likely in our home. We look at our home as not only providing shelter, but also appreciating over time with the equity it builds. But recent reports in the news about sub-prime loans and record foreclosures have many of us hesitant to begin the housing search or consider relocating. So should you just buckle down and weather the storm? Or go for your dream home now?

Contrary to what we hear in the national news, the housing market in the Rochester has remained relatively stable, say area real estate and mortgage brokers.
"We surely are not suffering the way other areas in the country are," says Sharon Quataert, a real estate agent with Hunt-Columbus Real Estate. "We have a healthy market, and while there was a temporary boom, we are getting back to normal. In addition, we did not have a lot of big sub-prime lending."

Homeowners that were the most affected were those that got into sub-prime mortgages that had higher rates but looser credit requirements. These are designed to be short term so the owner can get into a house while gaining control of his credit. "The problem," says Eric Hess, general manager for Finger Lakes Mortgage, "is that people did not take the necessary steps to think about how to get their credit issues corrected and be able to refinance at a lower rate."

The lending industry has changed, warns Hess. "Lending institutions require higher credit scores, and may not have as many programs to offer. Buyers need to be prepared." Taking the time to evaluate your ability to buy and pay for your new home can make the house hunting process less stressful.

"Properties are under-priced and rates are low, so it is a good time to buy," says Hess. Quataert agrees and stresses that if you know how much you can afford, you can easily avoid a legal mess and find a plan that works for you.

Be educated
Looking for the right home and the right mortgage is a partnership with your real estate agent and mortgage broker. Be sure to find out your credit score, down payment requirements, closing costs and fees, and the closing process. Understand how these factors affect your ability to secure the home of your dreams.

Know Your Limits
When looking at how much you can afford, be realistic and consider what is reasonable. Getting into high interest rate loans with little down payment may sound enticing, but there are ramifications. For homeowners who don't have the full 20 percent down payment, the lending institute may require private mortgage insurance (PMI) which is an extra expense that is not tax deductible. Also, be sure to consider both immediate and long-term expenses for repairs or furnishing your new home. Prepare and adjust your monthly budget to include mortgage and insurance payments, taxes, and utilities costs.

Pre-approval versus pre-qualifications
Today many home sellers are expecting their potential buyer to be pre-approved. A mortgage pre-approval letter is a step above pre-qualification. A pre-approval involves verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. If your loan is pre-approved, you are then issued a pre-approval letter. Pre-qualification is a much simpler process of just discussing with a broker your general finances, but does not always secure your loan the way pre-approval can.