A good real estate agent is very familiar with the neighborhoods where he or she shows properties. But because of legislation called the Fair Housing Act, the agent can't legally share all of that information with you.

Why the restrictions? The government wants to make sure that home purchase decisions are based on a property's fair market value and not factors such as race, religion or ethnicity. In other words, the law is meant to stop agents from steering clients toward or away from certain neighborhoods.

What can't a real estate agent discuss with a buyer? We asked Scott Klein, an agent based in New York City, to give us a rundown on the topics that are off-limits.

Schools: As with income level, sharing information about schools "might be perceived as steering someone into a certain neighborhood," says Klein. "However, as a Realtor I can direct people to sources of information about education in that area."

Here, too, the web offers prospective home buyers a wealth of information. Buyers can find useful school statistics, including enrollment, class size, and reading and math scores, at sites like School Matters and Great Schools.

Religion: The religious makeup of a neighborhood is another topic that's off-limits for real estate agents to discuss. If a buyer wants to find out about active religious communities in a particular neighborhood, Klein directs them to local houses of worship for information.

Crime statistics: Surely an agent can answer questions about local crime statistics, right? That's pretty public information. But it turns out that even this data is considered a sensitive topic under the Fair Housing Act.

Once again, buyers have to do their own research to find out if a certain neighborhood is considered safe. Homebuyers can find crime statistics online, including where sex offenders live, by logging onto Family Watchdog.

Klein also recommends that his clients pay a visit to the local police precinct and walk around the neighborhood to get a feel for it at during different times of the day.

Environmental concerns: A buyer would want to know if, say, a home is located near a Superfund site. In general, a real estate agent isn't going to be much help when it comes to neighborhood environmental issues. Buyers will need to figure this out on their own. One way is to visit the EPA's web site, which includes a database of environmental information, searchable by Zip code.

The one exception to this rule is if there is an environmental problem with a specific home. "If it pertains to that particular property, and it's something I have knowledge of, I am required to disclose that," Klein says.

So why use an agent if you have to do so much information-gathering yourself? An agent can show you homes, guide you through the buying process from start to finish and help you negotiate the best deals with sellers.

Interested in learning more about the home buying process? Check out these AOL Real Estate videos:

• Home Inspections: It Pays to Know What You're Buying
  
• Can Fixer-Uppers Work for First Timers?
  
• Common Mistakes Home Buyers Make
• Negotiating Strategies for Buyers

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When it comes time to purchase your first home, plenty of professionals out there can give you guidance and advice--real-estate agents, attorneys, lenders, and inspectors, to name just a few. But one of the best ways to learn about the home-buying experience is to talk to somebody who's been through the process.

Somebody, for example, like Gary Parker.

Parker, a first-time homeowner, bought his house this past summer. The government's first time home buyer tax credit was the signal to him that the time was finally right. "There was a deadline coming up, and I made it just in time."

Along the way, he learned some valuable lessons about how to make a first-time home purchase go smoothly. What Works Now sat down with him in his new living room to find out how he handled the steps along the way and what advice he'd give to fellow first-timers.

Parker chose a 30-year fixed rate loan to take advantage of today's historically low mortgage rates. "I wanted to make sure that I got that really low interest rate," he says, "and locked it in for a long time."

Find the right real estate agent

If Parker has one regret about his home-buying experience, it's that he didn't start working with a real-estate agent sooner. When he finally did, the process of house-hunting got a whole lot easier.

"My agent was a friend of mine," Parker says. "I only wish that I had reached out to him a long time before I did. He was able to point me in the direction me to the neighborhoods that I should consider, and he had access to listings that weren't necessarily posted online. So with his help I was able to really move the process quickly."

Many first time homebuyers are amazed by how long it can take to find the right place. "I must have gone to over 50 open houses," Parker says. "But it was worth the time invested. You really want to make sure that the home you're purchasing is just that--a home. The second I walked into my new place, I knew that was it, that I was home."

Know what's on your wish list
Even before Parker started his search, he had a list of things he was looking for. The first was a place that was move-in ready. "I didn't want to have to do any work before I got there," he says.

Second was a view--"something that I could just look out onto and daydream." Third--and, he says, most important--was a neighborhood where his mother and six-year-old niece could wander around and feel comfortable. The area he settled on, with parks, bike paths, and access to public transportation, perfectly fit the bill.

Be prepared for the occasional obstacle
Even transactions that proceed smoothly still run into the occasional obstacle. In Parker's case, he had a difficulty working with the seller. "She really slowed things down and took her time returning calls and paperwork," he says. "And on the day of the closing, she tried to negotiate additional money." Luckily, his agent was able to take charge of the situation and got the deal closed.

Is there anything Parker would do differently if he were to start the process all over again?

"The one thing that I would have done differently is that I would have hired my broker sooner," he says. "He really helped with every part of this process."

Now that you've heard a homeowner's first-hand experience, you should have some great insights on what to expect when you buy your first home.

Interested in learning more about the home buying process? Here are some AOL real estate guides that can help:

Can Fixer-Uppers Work for First Timers?
Common Mistakes Homebuyers Make
Real Estate Appraisals 101

Before Chin even started to look at properties, she paid a visit to her local bank to talk about financing. While getting prequalified or preapproved for a mortgage isn't a requirement for buyers, it's a good idea.

Getting prequalified and then preapproved lets you know what your loan program and the amount you can borrow will look like in advance. This can give you a big advantage at different stages of your house hunt, from helping you prepare your budget and set your expectations, to strengthening your negotiating position with the seller when you're making an offer on a home.

"It really helped to know in terms of budgeting," Chin says.

The process was straightforward. The bank--in this case the same one where Chin and her husband kept a checking account--asked for some additional credit and loan information, then preapproved the couple for a mortgage. Sometimes, this is also referred to as prequalified because some lenders require you to have a home picked out before they will preapprove the mortgage request.

Selecting a Mortgage Product

Another decision Chin needed to make was whether to choose a fixed-rate loan or an adjustable mortgage. A fixed-rate loan maintains the same interest rate and monthly principle and interest payment for the entire term. Most borrowers choose either a 30-year or 15-year fixed-rate term, though other fixed terms may be available.

An adjustable rate mortgage (ARM) usually starts with a fixed term--often five or seven years--and then resets periodically, usually every six to twelve months, in line with current interest rates. This means the interest rate--and the monthly payment--can fluctuate over time, so you should carefully consider your ability to handle potential increases.

Chin chose a 30-year fixed-rate mortgage. "It had the lowest monthly payment, and I liked having a fixed rate so I knew exactly what I would be paying every month."

Another way to lower the interest rate on a mortgage is by buying points, which are fees paid to the lender at closing in exchange for a lower interest rate over the life of the loan (each point represents 1% of the loan amount). Whether buying points makes sense for you depends in large part on how long you plan to stay in the home. The longer you stay, the more you can benefit from buying points.

Getting a Good Faith Estimate

After she completed her loan application, Chin received a Good Faith Estimate--a list of all the costs associated with closing the loan, including bank fees and third-party fees. "The Good Faith Estimate was definitely very helpful," Chin says.

"It listed estimated fees we would owe the lender when closing came around, so we knew what to put aside." Typically, closing costs come to about 3% of the total loan amount, depending on where you live and the size of the loan.

"Next in the process was the appraisal of the property and the inspection, and then we just waited to be approved" Chin says.

Preparing for the Closing

Before the closing, Chin received a HUD-1 Settlement Statement, with a final list of fees she owed at closing. Her lawyer compared it to the Good Faith Estimate to make sure the numbers matched.

Once everything was approved by the bank and the lawyer, the couple signed all the paperwork, handed over a cashier's check for their down payment and closing costs and received the keys to their new home.

Says Chin, "It was a great feeling."

These days, homebuyers have the upper hand in real estate transactions. But don't expect sellers to accept just any offer. When negotiating a home purchase, you still need to do your homework and determine a fair market value for a property. And if you're savvy, you may be able to get some extras--such as a home warranty or cash for closing costs--included in the deal.

Here's some expert advice on how you can haggle like a pro.

Carefully review the sale contract

Another important contingency gives the buyer an out if the appraisal comes in lower than the agreed-upon price. "Not only do you not want to pay more than a home is worth, you also may not be able to get a mortgage from a bank," says Roman.

As with the inspection contingency, you don't have to walk away from a property just because the appraisal comes in too low. Instead, you can ask for the seller to cut the price. So, for example, if the property appraisals finds that the home is valued $20,000 less than the price you agreed to pay, you can ask for a $20,000 reduction on the purchase price.

A third contingency you'll want to include is one that allows you to get out of the contract if you can't secure financing. Otherwise, you run the risk of losing the earnest money deposit you put down when you made your offer.

Negotiate for extras

Interested in learning more about the home buying process? Check out these AOL Real Estate videos:

• Home Inspections: It Pays to Know What You're Buying
  
• Can Fixer-Uppers Work for First Timers?
• Common Mistakes Homebuyers Make
  

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

Video Transcript for Hearing Impaired

Let's put together a budget so you can get a better idea of how a mortgage payment could fit into your overall financial picture when you consider your income, your current debt (like credit cards and auto loans), and your savings.

The second item is property taxes. To estimate the property tax before you buy a home, call your county tax collector office or visit their website. They should be able to tell you the property tax rates that are applicable to your area.

Keep in mind that taxes and insurance are determined, in part, by where you live. They will also fluctuate based on the size and value of your home.

Utilities: Utilities are next on the list. Be prepared to pay for everything from electricity and gas to water. Even if you paid this on your own as a renter, don't be surprised to find your bills are now higher if you're moving from, say, a one-bedroom apartment to a four-bedroom home.

Outdoor Maintenance: Coming in next is outdoor maintenance. While you may expect to pay for your lawn care, you may not be aware that garbage pick-up, snow removal and sewage are often part of a town's fees.

Indoor Home Maintenance: Finally, there's indoor home maintenance. This is the biggest unknown expense for homeowners. That's because you have to cover all of your own repairs, as well as the basic maintenance every property needs.

Unfortunately, you never know when the roof will start leaking or an appliance will break. But you can anticipate and budget for necessary home upgrades. One way to get a better handle on these costs is to tag along during the home inspection and ask the inspector when he thinks key home components, such as the boiler or furnace, will need to be replaced.

When you think of buying a home, keep in mind how much you can afford with all of these costs having been given consideration. Buying within your means will enable you to make the most of home ownership and enjoy it to the fullest.

Interested in learning more about the home buying process? Here are some AOL Real Estate guides that might help:

Video: Home Inspections: It Pays to Know What You're Buying

Video: Inside Home Inspections: Tag Along with a Pro

Video: Can Fixer-Uppers Work for First Timers?

Video: Common Mistakes Homebuyers Make

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

As soon as you're serious about buying a home, it's time to find an agent. Start off by asking friends or neighbors for recommendations. And don't stop at the first candidate. Ideally, you'll want to interview at least three professionals before you commit to working with one of them, says Gregory Olson, a real estate agent based on New York City. "Even if you like the first one you've interviewed, you still want to interview a couple more," Olson says. "And if you still like the first one after that, then I would hire them."

During the interviews, begin by asking each real estate agent about his or her experience, credentials and any professional organizations to which he or she belongs. Olson recommends asking how long the agent has worked in the industry. "Someone who's been in the business for more than two years usually has very good product knowledge," he says. You may want to work with someone is a member of the National Association of Realtors. You may also want to deal with an Accredited Buyer's Representative. This is a Realtor with special training who specializes in transactions representing buyers.

Next, ask the agents when they are available to show homes. "You want to find out if the agent has the same schedule as you," Olson says. "That makes it more convenient for you, and you always know they're available when you're available to look."

And don't forget to find out how well the real estate professionals know the neighborhood. Agents who specialize in a certain area have local knowledge that can help buyers. For example, they can tell you if a certain home is a good value for the area and help you select locations that best match your budget and lifestyle.

At the end of the day, the interview process should provide you with the information you need to achieve a level of comfort with an agent, so ask any and all questions that you feel are important in making that decision.

A Buyer's Agent

Once you get the basics out of the way, you may want to make sure you select a real estate professional who agrees to represent only you--and not the seller too, says Olson. This is very important since you'll be sharing some personal information with your agent, including how much you can comfortably afford to spend on a home. Should this number get back to the seller or the seller's agent, you could be at a disadvantage when it's time to negotiate the price.

You may also want to consider signing a formal contract called a Buyer Agency Agreement. This is a written agreement that specifies the terms and conditions of the real estate professional's representation of the buyer.

It's not uncommon for the buyer's agent and the listing agent to be employed by the same brokerage. In such a situation, called "dual agency," both you and the seller must agree to the dual agency setup. Occasionally, the same agent will represent both buyer and seller in the transaction. In that case, the agent is prohibited from disclosing confidential information to either party, or from negotiating on behalf of one party.

Negotiating Skills

Finally, a buyer should look for a Realtor with sharp negotiating skills. After you make your first offer on a home, the seller may come back with a counter offer. Offers can go back and forth several times before you and the seller come to an agreement. So you'll want your real estate professional to be able to help you determine where it makes sense to be firm and where it makes sense to be flexible, as well as how to handle bad inspections or low appraisals during the buying process, which can sometimes derail a purchase altogether.

"Everything is negotiable," Olson says. If the roof needs $8,000 in repairs, for example, he would try to negotiate a reduction in price or get the seller to make the necessary repairs. You want an agent who will be just as tough on your behalf. "You want to hire someone who's going to represent your interests and have your back in the deal."

Once you have all this information, you should have a much better grasp of who you feel most comfortable working with during the home buying process.

Now let's go check out some open houses.

Interested in learning more about the home buying process? Here are some AOL real estate guides that might help:

Can Fixer-Uppers Work for First Timers?
Common Mistakes Homebuyers Make
Real Estate Appraisals 101

The most obvious advantage to buying a new construction home is that everything--from the roof and the windows to the appliances and systems--is new. And many items, along with the house itself, often come with warranties. That means you should see relatively low repair costs during the first few years of ownership.

Operating costs are also lower with newer homes since they are more likely to be energy efficient. Energy Star appliances, more efficient heating and cooling equipment and energy efficient windows can save you money in the long run. Many energy-efficient upgrades could even earn you an income tax credit (but don't take our word for it, be sure to check with your tax adviser).

Another pro is that if you purchase a new construction property early during the preconstruction phase, you might be able to customize many features, such as the paint colors and the appliances, to suit your personal tastes.

Here's the best part: A builder may lower the asking price or even throw in some free upgrades and amenities. And don't be surprised if a builder offers you financing options for a mortgage.

That said, it's important to know that builders can't require you to use their preferred lender. You still get to choose your home loan. But an offer from a builder's lender does give you another point of comparison to weigh as you choose the best mortgage for your financial needs.

The Disadvantages

Don't let the lure of "new" sell you without hearing some possible downfalls. First and foremost, you can't assume that a new construction home is in perfect condition. You should still get the property inspected by a professional home inspector prior to purchase to make sure that everything is properly installed and in good working order.

The second disadvantage: "location, location, location." Builders usually start communities where there's open land. So if you buy into a new suburban development, you'll likely find yourself further away from a city center. This could make your commute to activities or work much longer--and more expensive. The distance could also make the home harder to sell down the road, especially if the property is competing with newer houses with more updated amenities.

Another con to consider is if the home is in a new development. If that's the case, you don't necessarily know what the character of the neighborhood will be, as opposed to an established area that already has a "personality."

Yet another downfall is that you may want or need to spend more money on exterior projects, since there won't be mature landscaping.

Finally, since we can't control everything--especially Mother Nature--remember that any time there's construction involved, a homebuyer needs to be prepared for delays. So don't be surprised if your move-in date gets pushed back.

Armed with this information, you can now go tour some model homes.

Interested in learning more about the home buying process? Here are some AOL Real Estate guides that might help:

Video: Home Inspections: It Pays to Know What You're Buying
Home Inspections: What to Expect


These AOL Real Estate guides can help, no matter whether you choose to buy or sell:

• First-Time Homebuyer's Guide
• How to Shop for Your First Home
• How to Price a Home to Sell Fast
• How to Get a Low Mortgage Rate

What can sellers do to get ready for an inspection?

A seller can also prepare the home for the inspection. The most important thing to do here is to keep all key areas of the house free, clear and accessible. This includes providing access to the furnace, boiler and circuit breaker.

In an ideal world, the home will inspect well and the real estate transaction can move forward. But what happens in the event that things don't go as planned? Don't be surprised if the buyer asks the seller to spend some money to make some repairs identified during the inspection. Buyers may also request to renegotiate the home's price to accommodate the necessary improvements that the inspection uncovered. And in a worst-case scenario, the buyer could even walk away from the transaction entirely.

Obviously, the best way to avoid any of these situations is to deal with any problems before the inspection takes place. And how can sellers do that? They can get their own pre-sale inspection before putting the property on the market.

As you can see in this video, the inspector found some potential problem spots that the home owner may not have even considered - like a tree too close to the home and stairs not being built to code.

While hiring an inspector may feel like an unnecessary expense for a seller, it could actually end up saving money down the road. If the homeowner can make some simple repairs before the open houses begin, there will be fewer issues for buyers to notice, and the inspection process will go more smoothly once an offer is made on the home.

Interested in learning more about the home buying process? Here are some AOL Real Estate guides to help you:

Here are some common pitfalls and some expert advice on how to steer clear of them, whether you're a first-time home buyer or someone more experienced at the real estate game.

1. Not Having a Contract on Your Existing House Before Buying a New One

A big mistake homeowners make is not having a signed sales contract on their existing property before they agree to buy a new house. The only way you can truly know how much house you can afford is if you know what your existing home fetches.

More important, in today's market you never know how long it will take to sell your property. The days of receiving multiple bids at your first open house are over. So don't be surprised if the process takes several months or even a year. Wait to list your house until after you've agreed to buy a new one, and you could get stuck carrying two mortgages.

One way to cover yourself would be to have a contingency, or legal "out", in the contract for the home you're buying that lets you out of the contract if the sale of your existing home somehow falls through. This would spare you from carrying two mortgages, but not from the disappointment of a lot of time and effort spent on a fruitless house hunt. More on contingencies later.

2. Not Pulling Your Credit Reports Before Applying for a Mortgage

Here's a fact: credit reports often contain errors. And those mistakes could drag down your credit score and cost you more in interest and fees on a loan. So you'll want to get a free copy of your credit reports so you can fix any problems before you contact a lender.

You should also consider checking your credit score. A higher score increases a lender's confidence in the likelihood you will make payments on time, so this number can make a big difference in whether you qualify for a mortgage, and if so, the type of mortgage you can obtain. A higher credit score may help you qualify for better interest rates. And some lenders may lower their down payment requirement if you have a high credit score. On the other hand, a credit score under 620 could make it harder to obtain a mortgage. Lenders differ, but a good score is usually considered to be 700 or above.

If yours is lower, work on raising it by paying off your revolving debt, including credit cards, and sending in your bills on time.

3. Failing to Secure Financing Before Making an Offer

It's true that lending standards have tightened - but there loans are being approved. Just make sure you have that loan in place before you make an offer on a new home. Without financing lined up, you could start the negotiating process only to find that your deal falls through if you can't secure a loan in a timely fashion. (And smart sellers wouldn't accept an offer without financing preapproval anyway.)

Getting preapproved before you make an offer can also give you an edge with sellers and strengthen your negotiating position. A preapproval lets everyone know you're serious and able to close the deal..

Most importantly, by going through the mortgage preapproval process you will find out how much you can comfortably afford, and by knowing your limits, it's less likely that you'll be tempted to over-spend on a home.

During this process, be sure to factor in all the other costs that come with homeownership, like homeowners insurance, property taxes, maintenance and utilities into your monthly mortgage payment.

4. Not Including Some Contingencies in the Contract

As mentioned earlier, contingencies are your legal "out" if something goes wrong during the buying process. Without them you could lose the money you put down to secure the deal, typically 1% to 3% of the purchase price.

For example, you'll want a contingency that allows you to renegotiate if the appraisal comes in below the agreed upon price. And don't forget to add an out if the home doesn't inspect well.

One more thing to think about is the contingencies the seller asks for. You'll want to carefully consider a request to stay in the home until the homeowner closes on a new property. Again, in this market it's tough to know how long that could take.

Interested in learning more about the home buying process? Here are some more AOL Real Estate videos that might help:
Appraisals 101
Inside the Mind of an Appraiser
Tag Along with a Home Inspector

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.