3 tips for new home buyers

Before you beat a path to the nearest open house, educate yourself on the homebuying process.

1. Buy less home than you can afford. "Just because we might be able to qualify you for it, doesn't mean you should go for the max," the loan officer says. Leave slack for retirement and college savings. Rather than what you want, consider what, realistically, you need: "We, as Americans, got a little bit egregious as to how much house do you get," he says. "The reality is, you got there and you only needed half of it.

2. Think ahead. Since prices are still dropping, be prepared to stay in your new home at least five years. When prices recover, you should at least break even when you sell. Forget about making a fortune on a home. Those days are probably over for a while. And, if your family is growing, get a home big enough to meet your needs five years out rather than going for granite countertops and high-end upgrades now.

3. Stash the credit. If you don't need the tax credit for a down payment, use it to pay down consumer debt, to start a college fund for your kids or to fatten your retirement account.