4 Steps to Minimize the Risk of Owning a Home

1.Stick with a fixed-rate mortgage. Recent datashows that adjustable rate mortgages, or ARMs, areincreasingly popular, rising from 9 percent of themortgage market in the fourth quarter of 2010 to12 percent in the first quarter of this year. Thismight seem crazy to some, but in financiallyaggressive crowds, the lure of low, 3 percent(ish)interest rates on ARMs is enough to overcome anyqualms. As well, today's ARMs tend to have lowerlifetime interest rate caps and require payment ofprincipal, so they don't adjust as violently as thesubprime interest-only and option ARMs thatcontributed to the foreclosure crisis.

2. Put and keep a home warranty in place. Oneof the most frightening things about going fromrenter to homeowner is the prospect of beingsolely responsible for the care and feeding ofyour home and all its systems and appliances.Responsibility for both the costs and the actuallogistics of repairing things like a leaky roof, abroken hot water heater or a haywire electricalfixture looms large in the minds of first-timebuyers, in particular.

3.Get repair bids and estimates, not justinspections. After you find the home of yourdreams (or the home of your budget!) and get intocontract, you'll have a contingency or objectionperiod ranging from 7 to 17 days during which youcan obtain all the inspections you want. Mostbuyers start out with a general property inspection,a pest inspection and a roof inspection, then getmore specialized inspections if the property callsfrom it. Pest and roof inspectors will generallyprovide an inspection report AND a repair bid forany work they find needs to be done.

4. Buy on the 10-year plan. Warren Buffettonce famously advised stock investors to "onlybuy something that you'd be perfectly happy tohold if the market shut down for 10 years." Thesame advice is good for buying a home intoday's real estate market. Take on a mortgageyou know you can sustain, buy at a price you cancomfortably afford and avoid having to sellbecause you need to move for some urgentreason, or because the home no longer meetsyour needs.

Randy BettInvestment Realtor/Author/Investor

Real Estate Professionals Inc.Better Group Real Estate 202-5403 Crowchild Trail NWCalgary, AB T3B 4Z1

Phone:403-774-7464 Ext:1Fax:403-208-0082Toll Free fax:888-711-6801

Randy Bettwww.BetterGroupRealEstate.ca