IF YOU’VE NEVER BOUGHT A HOUSE BEFORE, much of the jargon and terminology could prove daunting. After all, who would give “discount points” or “5-1 adjustables” the slightest thought unless they absolutely had to? We’ve arranged this short primer on the basics of buying a home as a series of questions and answers that try to address the basic issues with which every home buyer must grapple.

1. “Can I make an offer that’s well below the asking price?”

If you have your eye on a home that has a hefty price tag, don’t rule out making a lowball offer. You may be surprised by the seller’s response.

In fact, buyers can go as low as 25% to 35% below the asking price, says Robert Irwin, author of “Buy Your First Home.” And they shouldn’t worry about insulting the homeowner.

“I don’t think in this market any offer will insult the seller,” he says. “Sellers are so anxious to get any kind of offer that they may counteroffer and begin negotiations.”

Before you make an offer, find out how much comparable houses in the neighborhood sold for. To get this information, you’ll need a Comparative Market Analysis (CMA), which you can get for free online or by asking your real estate broker. These reports are usually six months old, so you want to adjust the prices to account for the latest trends in the housing market, Irwin says. Then, if you decide to make an offer that’s significantly below the asking price, you can show the CMA report to the seller to explain to them why they should accept your offer. Keep in mind that the chances of your lowball offer being accepted have a lot to do with the local real estate trends.

2. “Do I really need to use a real estate broker?”

The first thing you need to know about real estate brokers is that they typically work for the people selling the home — not you. The standard practice is for the seller to hire a broker, who then takes over marketing the home and seeking out potential buyers. For this, brokers usually are paid around 6% of the sale price, which gives them a built-in incentive to find the seller the highest price they can.

That sounds simple enough. But as you begin to drive around town with seasoned agents, you’ll quickly find that they act like they are, in fact, working for you. So don’t get too cozy. You will probably be tempted to tell an agent the highest price you are willing to pay for a house or the size of down payment you can afford. Don’t. The agent is obligated to pass those details on to the seller, which could hurt you in any negotiation. Also, don’t feel obliged to buy a home through one particularly helpful broker. Use several to have the widest selection of possible homes.

You don’t need to use a broker at all if the house you want is being sold by an owner himself. Indeed, you’ll have a lot more room to negotiate on price if the broker’s 6% fee is absent from the equation. It’s also not that difficult to sell your house without a broker, though it is a significant commitment of time and energy — one you may not be willing to make. Check out Going Solo for more information on what you can expect.

Are all brokers bad? Of course not. A good agent can be very helpful, if only because he or she has access to a large database of listings in your neighborhood of choice. Agents can also recommend schools, local contractors and mortgage brokers. (Although, you shouldn’t rely too heavily on their advice; they’ve been known to take kickbacks.) And they can often help steer you through the home buying process, while smoothing out bumps in the negotiations. Remember this, too: An agent’s fees are always negotiable. Are you and a seller at loggerheads over who’s going to repair that damaged furnace? Maybe it should come out of the broker’s fee.

In the past few years, so called “buyer’s brokers” have become more popular in certain parts of the country. Unlike traditional real estate agents, they work for — and are often paid by — the buyer. They are supposed to help assure you get the best deal. They can be invaluable if you are moving to a town or part of the country you are unfamiliar with or have little time for house-hunting. Like a regular broker they are a font of listings.

The problem is, their terms often require that you use only them for a set time period. That’s fine if you trust the broker and just want someone to screen homes for you. But it can leave you hamstrung if you’d like to go out and do some looking on your own or if you want to use a number of brokers. Also, compensating a buyer’s broker can be tricky. Paying by the hour adds up, but paying a percentage of the purchase price gives a broker the wrong incentive: Getting you to pay the highest price returns the most to him. Sometimes, a buyer’s broker will settle for splitting the fee with the broker who has the listing.

3. “How do I figure out which type of mortgage makes sense?”

At the most basic level, mortgages come in two categories: fixed rate and adjustable. In both cases “rate” refers to the rate of interest you pay the bank for the privilege of borrowing its cash.

Fixed-Rate Mortgages
A fixed-rate mortgage is so called because its interest rate doesn’t change over the life of the loan, no matter what rates do on the open market. Many people feel more comfortable with a fixed rate, because they know their monthly mortgage payments will remain steady over the years, making at least one aspect of their monthly cash flow predictable. The downside is that you pay for that comfort: Lenders charge a higher rate of interest for fixed-rate loans. Why? Because they figure that if interest rates shoot up, they lose the opportunity to make more money on the funds they are lending you.

The standard fixed loan lasts for 30 years, but if you can handle higher payments and want to build up equity in your home faster, you can opt for a 15-year fixed. With a 15-year, you’ll get a lower rate and pay much less interest over the life of the loan. The payments each month, however, will be quite a bit higher since they aren’t being stretched over so long a period.

A fixed rate makes the most sense for those who plan to stay put in their new home for a long time. You pay a little more in interest, but it is stretched over a longer period so the monthly effect can be minimal. And if you’re buying when rates are low, locking in a good deal is probably worth it.

Adjustable-Rate Mortgages
Adjustable-rate mortgages, known as ARMs, get their name because the rate you pay changes according to a set formula as interest rates fluctuate on the open market. As noted above, the upside is that lenders charge a lower rate for such loans because you are taking on some of the interest-rate risk. This makes your monthly payments lower — at least in the beginning. Such loans provide a way for many buyers to afford a larger loan amount for a given monthly payment. An adjustable works out wonderfully if rates drop — something you should never count on.

If rates rise, there is a limit to how much an adjustable can adjust. Lenders limit the amount the rate can rise, often to no more than two points a year, with a lifetime cap of six points. But in a rising interest rate environment, watch out: In a year or two, your payments could far exceed what you would have paid for a 30-year fixed.

Generally, the cheapest rate out there is on a one-year adjustable. With a one-year, your rate can change annually, making these loans particularly risky. Even in a year when interest rates are very low, there’s no guarantee that the rate won’t skyrocket the next year. If you are willing to endure the hassle and expense of refinancing after a year, it’s possible you’ll come out ahead. (See Should You Refinance? for more.) But a fixed rate mortgage is almost always recommended over a one-year adjustable.

A slightly more expensive option is what’s known as a “delayed adjustable.” When you see “3-1 adjustable” or “5-1 adjustable” it means that the loan stays fixed for three or five years and then resets annually. The longer the fixed period, the higher the rate. The idea is to match the loan to the amount of time you plan to stay in the house. For instance, if you expect to move after three years, a 3-1 is a great option. After five years, you might as well opt for a fixed rate. The price difference will be minimal.

Figuring out which kind of loan makes sense for you depends entirely on your circumstances and temperament. But several of the sections found here can help. What Kind of Loan Should I Get? walks you through some typical home buying scenarios and suggests mortgage solutions. And you can use the worksheets found in How Much House Can I Afford? and Fixed or Adjustable? to help you decide what size loan you can handle and whether to take a chance on an adjustable.

4. “How does a bank decide if I get a loan or not?”

There are many factors that go into the bank’s decision, from how long you’ve been at your job to how many credit cards you carry. The most important thing lenders look at, however, is your ability to meet your obligation to them, which is a function of your income and debt levels.

To gauge your ability to pay, lenders look at a pair of numbers called the “housing ratio” and the “total-obligation ratio.” They’re not as daunting as they sound. The first is just the percentage of your gross monthly income that you’ll need to spend on housing expenses after you buy the new home. It includes your mortgage payment, taxes, insurance and maintenance. Lenders will want to see a ratio of 36% or lower. The total-obligation ratio, meanwhile, is the portion of your income that goes to covering both your housing expenses and any other obligations, such as credit cards, car loans and child support. There, your lender will want to see a ratio of 42% or lower. Both of these ratios may be negotiable.

Our worksheet, How Much House Can You Afford?, will take you through the same process a lender uses to assess your application. It will tell you your ratios and give you an idea of what size house they will allow you to buy.