Home ownership. It's the American dream.

But that beautiful three-bedroom ranch home with the white picket fence can quickly become a nightmare when if you're unprepared during the home-buying process.

Sure, real estate can be confusing, with all the different agents and mortgages to choose from, appraisals, inspections, insurance, surveys, etc. But by following these basic guidelines, you can keep the American Dream from becoming a nightmare!

1. Think of a home as an investment. Every month, you must make a payment. Part of that payment goes to interest, and the other part goes to the principal. So you are forced to save money each month.
2. It's a great inflation hedge. Generally, real estate keeps up with, or even passes, the rate of inflation. And when you sell that home 10 years from now, you'll be glad it did.
3. It grows virtually tax free. If you stay in your home for at least two years, you could gain up to $250,000 as a single, or $500,000 as a married couple, and pay zero tax when you sell the house! That's a pretty sweet deal.

What Not to Do

Now, if you actually want a bad deal, then don't get title insurance. Purchasing title insurance will protect you from an unclean or disputed title. For example, just imagine that you close on a nice house, and then the previous owner's crazy Uncle Eddie appears out of nowhere and argues the home was left to him in a will. If you have title insurance, the insurance company will pay Eddie to walk away, and you'll then have a clean title.

And, whatever you do, never buy a trailer, mobile home or timeshare. The value of these properties drops like a rock. You will never get back what you put into them.

What TO Do

To get the most out of your home-buying process, make special note to do the following:

• Get a land survey, especially if you are purchasing more than the standard subdivision lot.
• Hire a certified home inspector. Be sure to have the home mechanically and structurally inspected.
• Order an appraisal. If in doubt, do this. These are simply "opinions of value," but they are still professional opinions.

It's okay if the house is a little dirty on the inside. You can straighten that up. You can get a deal by overlooking some clutter like bad landscaping, outdated carpet, and the velvet Elvis in the living room. Though this stuff can easily be replaced, a lot of people can't overlook cosmetic issues. However, you don't want a house with a bad floor plan. Otherwise, you may be staying there awhile because it's tough to sell a house with "ugly bones."

One of your top concerns when buying a house is location. Don't overlook this important issue. Houses in great locations will generally sell quickly. Combine that with a beautiful view or close proximity to water, and you've found a real estate agent's dream.

If your agent has access to the MLS (Multiple Listing Service) and every good one will, then he or she will be able to give you information about the best areas in town to purchase.

Find a real estate agent in your town that Dave recommends.