If you're a buyer wanting to take advantage of holiday rates, remember to consider vacation schedules and holiday hours.

It will take longer to get loans approved when banks are closed for the holidays, and many employers offer short days or full weeks off for their staff. Inspectors will also take long weekends and have plans to be out of town — not always on the holiday. When they get back from vacation it takes some time to get caught up and back on track.

Plan ahead and allow some extra time to do your inspections and loan approval so you aren't at the mercy of a demanding seller.

Despite the gloom and doom of the financial market, buying a home that you plan to live in for 5 to 10 years is not a bad idea if you meet the financial requirements.

Let's run some rough numbers: First-time buyers purchase a home for $400,000 with 20 percent down ($80,000). The loan amount is $320,000 (let's assume the buyer paid all the fees, costs, etc.). At a 6% interest rate your interest payment is around $1920 per month for a 30-year loan. Incorporating the cost of property tax ($400) and insurance ($70) your mortgage payment is $2390. If you are also paying principal on the loan, let's guestimate another $300. So your monthly mortgage is between $2390 and $2690.

While that's some serious change, and I'm not recommending anyone purchase a home they can't afford, let's look at the comparison. Say you rent the same home for $1700/month. Using the interest-only figure for the comparison ($2390), after 5 years:

Renting: $102,000 spent over 5 years
Owning: $143,400 spent over 5 years

So how likely is it that in those five years your home will go up in value $41,400? Yep, it's quite possible. Even probable. If you're handy around the house, you certainly can do a number of improvements yourself and gain sweat equity that benefits you even in a difficult market.

Yes, you put down $80,000. I'm not forgetting that. But it's unlikely you stuck that saved $41K in the bank while you were renting and "saving all that money." If you paid principal in addition to the interest, then you gain equity by paying against the balance of the loan. So at $300/month you've paid off $18,000 of your $320,000 loan.

Sure, you may own a home and drive an older car. But economically, borrowing to buy a house is money far better spent than borrowing to buy a new car. Fat chance that car will go up in value in five years.

Lenders are looking at communities and geographic areas to determine "depreciating markets." If you are buing in a depreciating market, the lender may be extremely cautious or refuse to loan on the property based on the loan-to-value ratio. Here's the catch-22: If it takes 30 to 45 days to get approval for a loan, your escrow period will be approx. 15 to 30 days more. Over a 60-day period it is possible your purchase in a depreciating market may depreciate below the contract sales price. Your lender may want to renegotiate the terms–the loan amount or sales price–before funding.

Having flexibility in your cash down is wise…and one way to offset this type of situation. More cash down drops the loan-to-value ratio. Alternately, proceed as far toward the approval process and get a fixed figure not to exceed in mind. If you can get approved for a $600K purchase, find a home under $600K to allow some wiggle-room.

What should we do to prepare for a first home purchase?

Unless you have the opportunity for a cash purchase, most of the pre-purchase preparation of home buying (aside from finding the right location and home) is getting established credit, income, and assets.

Lenders scrutinize their clientele much more thoroughly now. To get the best rates and terms it is wise to have:

- 700+ credit score

- Little to no debt (ie., credit cards, car loans, student loans, etc.)

- Established career whether it be employment, self-employment, or business ownership with traceable and stable income

- Excellent financial records (IRA statements, bank statements, W-9s and W-2s, several years of tax returns preferably done by a CPA, P&L statements if business, etc.)

- 20% or more cash down toward the purchase price of your home plus closing costs (approx. 1% to 3% of the purchase price)

- Cash in the bank left over after the purchase, roughly 2 to 3 months of living expenses (inclusive of your new mortgage payment)

What type of deductions can be obtained next season if we buy our first home this year?

There are many benefits to owning your own home, both large and small. Here are some of the most common, current tax-deductible homeownership expenses:

- Mortgage interest on loans (up to $1 million) is deductible for the year in which you pay it to buy, build or improve your principal residence.

- You can deduct points paid the year you purchase your home, regardless of who pays the points (buyer or seller).

- Real estate taxes paid at closing and/or annual property tax payments can be deducted if you itemize deductions.

- If you operate a business out of your principal residence, you can deduct a portion of your mortgage interest, insurance, utilities, repairs, and depreciation for that residence.