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Are you ready to buy a home?

The purchase of a first home is an exciting time in anyone's life.

It's also a large financial undertaking, a fact that leaves many people wondering whether they're prepared for this big step.

The Minnesota Society of CPAs suggests you answer these questions to help you decide if the time is right for you.

What's the hurry?

Owning your own home is a tempting prospect, but make sure that you are not hurried into making a decision.

Home sales have generally been slow for the past year, which makes it less likely a house you like will be bought overnight.

Even when the market is hot, though, it's best to look around in different neighborhoods and at various types of homes to see what you can afford and to be sure you have all the information you need.

How much will it cost?

You are probably aware that you will need a down payment, usually about 20 percent of the home's purchase price, to buy a home and that you will then make monthly payments on a mortgage that covers the rest of the total purchase price.

You will likely also have to make monthly payments for local property taxes, utilities and home owners' insurance, as well as cover one-time upfront costs for moving and any furniture or appliances you need.

Consider also the price of any renovation or repairs the house may need, and for general upkeep of the home and property around it.

How do taxes affect me?

There are many potential tax deductions associated with home ownership that you should be aware of as you plan your purchase.

For example, many people are able to deduct the interest they pay on their home mortgage loan.

In the early years of a mortgage, that interest is the lion's share of your monthly payment, so this potential deduction is a good thing.

That's because when you take deductions, they lower your taxable income and, as a result, you end up paying fewer taxes overall.

In many cases the points you pay on a mortgage loan may also be deductible.

And, while real estate taxes are one of the hidden costs you should be aware of, they are also deductible.

First-time homebuyer tax credit

If you have purchased a home this year or plan to do so before Dec. 1, you may qualify for this tax credit.

For 2009, you are allowed to claim 10 percent of your purchase price, up to $8,000, or $4,000 for married people filing separately, as long as you meet certain income limits (slightly different rules apply for homes bought in 2008).

You don't have to repay the credit if you don't sell your home within three years of purchase.

The credit can be used for the purchase of a principal residence in the United States if the buyer or his or her spouse has not owned a principal residence at any point during the three years before the title closing date. (The credit does not qualify for vacation homes or rental properties, however.)

MNCPA provides free tax and financial planning information for individuals and small businesses. Visit for more information.