Better yet, lease a home with an option to buy it. Then you will be building a rent credit toward your down payment if you decide to buy that house.

The first criteria for selecting both a desirable residence and a smart investment is to compare the quality of schools. The best realtors have this information readily available in their office.

If the realtor you contact doesn't have these statistics on elementary, middle and high school test scores, you should be doing business with a better quality agent. The local school district offices also usually have this information easily available.

The reason school quality is so important, even if you don't have children, is good schools increase homebuyer demand, whereas poor quality schools hurt home sales.

After you narrow your choices to areas with the best public schools, your second criteria is to prequalify for a home mortgage in your affordable price range. Your down payment and family income will be important for obtaining a mortgage.

A local bank, S&L or mortgage broker can pre-approve your mortgage, but subject to appraisal of the house you decide to buy. However, don't accept "pre-qualification" or a non-written pre-approval because dishonest mortgage lenders have been known to lie.

The third step, after you have checked the school quality and received written pre-approval from a mortgage lender, is to start looking at homes for purchase. Don't be in a hurry. Finding the right home in the right school district which you can afford may take up to six months, sometimes even longer.

Q: We are in the process of buying our first home. As you often suggest, we told our real estate agent we want to buy a house with a non-qualifying assumable mortgage. She has shown us about 20 houses with nonqualifying VA and FHA mortgages. But the seller of the house we want to buy insists we assume her FHA mortgage. That means we have to fill out lots of paperwork to qualify for the assumption. Isn't there an easier way?

A: Yes. Now that you've located a home you like with a non-qualifying assumable mortgage, your purchase offer should specify you want to purchase it "subject to" the existing mortgage. That means you won't formally assume its debt obligation. Of course, you must make the monthly mortgage payments or you will lose the house by foreclosure.

However, from the seller's viewpoint, she wants you to formally assume the mortgage debt because then she can be released by the lender from further liability if you default on the loan.

If the seller doesn't have much equity in the house and you are making a low down payment, default is a seller risk because the VA and FHA can and do seek deficiency losses from the original borrower if the lender suffers a foreclosure loss. For further details, please consult a local real estate attorney.

Q: I own a commercial building that has been empty over two years since I moved my carpet business to a larger building. I've had the property listed for sale with several real estate brokers who have been unable to find a buyer.

The problem is lack of available mortgage financing. After reading your repeated advice to home buyers and sellers that a lease-option can sell virtually any home, do you think a lease-option might work to sell my commercial property? If so, how do I go about it? I've talked with several brokers but they said lease-options don't work for commercial buildings.

A: Yes, lease-options work with virtually any type of property, even vacant land and commercial buildings. If you really want to get the building sold, give your tenant-buyer a big rent credit of 50 to 100 percent of the rent. The bigger the rent credit, the greater the probability the tenants will exercise their purchase option.

Q. Our house has three bedrooms and two bathrooms. My wife says if we add a fourth bedroom and another bathroom, for use by guests, we will be adding 150 percent of the cost to the value of our home. Is this true?

A. No. You will be lucky if the home's market value increases by the cost of the bedroom and bathroom addition. Although you and your wife may need and want that addition, from an economic viewpoint it won't be a profitable expenditure. The best book to read on this topic is "Renovating Your Home for Maximum Profit" by Dan Lieberman and Paul Hoffman (Prima Publishing, Rocklin, CA, 1989, $21.95) available in stock or by special order at local bookstores and libraries.

(Copyright, 1993, Tribune Media Services Inc.) Bob Bruss' column appears Sundays in the Home/Real Estate section. His mailing address is: Bob Bruss, Seattle Times Newsroom, P.O. Box 70, Seattle, WA 98111.