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BOOKLET GIVES ADVICE TO PROSPECTIVE HOME BUYERS

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The prospect of buying a home can be daunting. But it's not as bad as it may seem, says the U.S. Department of Housing and Urban Development, publisher of a booklet called The HUD Home Buying Guide (item 635B, free). To request a copy, send your name and address to Consumer Information Center, Dept. 635B, Pueblo, CO 81009.

One of the first things to do is figure out what you can afford. And since most people have to get a mortgage, that means determining how much you can afford to pay on the mortgage each month.A good rule of thumb is 25 to 29 percent of your gross monthly income can go toward housing. That includes not only your mortgage payment but taxes, insurance and homeowners association fees.

An example: If you earn $2,500 a month before taxes, you can probably spend about $725 a month on housing. (To get that figure you multiply $2,500 by .29.)

To figure out the selling price of the house that would give you a $725 monthly payment, you need to consider the interest rate you'll be paying.

The HUD Home Buying Guide includes an easy-to-read mortgage payment chart based on a 30-year fixed rate mortgage. By using it you can get a pretty good idea of the selling price you can afford.

The chart covers interest rates from 6 to 10 percent and homes with selling prices up to $170,000.

Before making what could possibly be the biggest investment of your life, learn as much as you can about the home buying process, including terms you may not be familiar with.

The booklet defines such terms as "earnest money" and "assumable loan."

A real estate agent can help you decide which mortgage is best for you and help handle the seemingly endless paperwork. The agent's commission is usually paid by the seller, which means when it comes to negotiating the sales price, the agent is usually working for the seller, not the buyer.

HUD owns homes in communities throughout the country. It sells them at attractive prices and economical terms. The homes are sold "as is" so it's wise to have a trained home inspector check the structure before you buy.

HUD requires a three-percent downpayment as opposed to 10 or 12 percent that you would normally need for a non-HUD home.

To purchase a home from HUD, you submit a sealed big through a real estate broker.

The booklet can fill you in on the specifics.