Is now the time for a new home?

No question about it. Now is a great time to find bargains in real estate. Housing prices are near rock-bottom and interest rates for borrowing are also quite low. If you're a first-time homebuyer the deal is even sweeter with an $8,000 tax credit that doesn't have to be paid back.

Whether you are looking to buy your first home, a larger one to accommodate your growing family, a second home, or downsize as you launch your retirement, consider a few things before taking the plunge.

Can you afford the home of your dreams? The cost of a home is much more than just your monthly payment. Don't forget about insurance, real estate taxes, homeowner association dues, utilities, furnishings, repairs and maintenance. Be sure you have budgeted for these items which are all as certain as death and taxes. Some repairs can be incredibly expensive and may or may not fall under the umbrella of your homeowner's insurance policy. Some communities impose income taxes of their own. Just living in a particular city may cost you an additional 1-2 percent of your adjusted gross income each year.

Will you be able to obtain a mortgage at a reasonable rate of interest? Whether or not you can secure a mortgage will depend on your income, assets, employment history and credit score. Knowing your credit score is essential for borrowing. You will need to have excellent credit to lock in the most favorable interest rates. Check your credit report free at www.annualcreditreport.com. Keep in mind that an average to poor credit score will cost you on more than just your mortgage. You'll also pay higher rates for a home equity line of credit (and these are already at prime plus 1-2 percent) and you'll pay higher premiums on your property and casualty insurance as well.

Is your financial house in order? Do you have an emergency fund (AFTER you've drained your savings for a down payment) that will provide for at least 3-6 months' of expenses? Is your employment secure? How long might it take you to find a new job if you lost yours tomorrow? A mortgage is a tremendous, long-term responsibility. If you are living paycheck to paycheck, with no emergency funds on which to rely, it's probably not a good idea to strap yourself down with such a debt. If your job is unstable or transient, you may be better off renting. It is not easy to liquidate a home, especially in the current housing market.

Once you've determined that you can afford the home of your dreams, one of the most important considerations is location, location, location. This is more than just where you are planning to live. Carefully consider the quality of education in your prospective community as well as safety of your new neighborhood. Also consider visiting the home at several times during the day to get a more accurate picture of traffic flows, nightlife, etc.

Buying a new home can be exciting and stressful. Have a good idea of what you can reasonably afford before you begin shopping. Determining your price range will help to narrow your search and keep your expectations in check.