To start off your questions, no, it is not required that you have a NeoHome. But it's best to have one - you don't want your NeoPet homeless! To locate your NeoHome, go to Pet Central and click on NeoHome.
If you're starting a NeoHome for the first time, click on Add/Remove Rooms or Gardens.
There will be many options for the land you may choose. This is where your NeoHome will be located. You cannot change the land once you apply (you can for rooms), so pick carefully!
Mystery Island 2,500np
Spooky Woods 5,000np
Lost Desert 7,500np
Roo Island 10,000np
After they have built your NeoHome(I believe it takes 24 hours, correct me if I'm wrong), then you will come to an area of just plain land, which have clickable squares. Click on the top right hand corner and a new window will pop-up. You can select the Room Material you want. What is that? It's what the room will be made out of. If you made it out of cardboard, it would be cardboard looking and so forth for the others. The prices range from 100np to 14,500np PER room (without extensions).
Cardboard, Straw, Twigs, Bamboo, Wood, Chocolate, Stone, Jelly, Brick, White Chocolate, Marble, Silver, Cloud, Gold, and Transparishield.
Fill out the information. The exits are what lead from room to room, so please, make it convient. If you'd click to build a garden, click "Build a Garden" when you go to make a room (after you have selected the area you want and get a pop-up window).
After you have built about 6 rooms, you will start getting "Extension Options ". These are things such as the carpet type, how much heat your NeoHome will have, how much light, etc. You have to pay with each room. For example, if you buy electricity, on the next room you create you will have to pay for the extension.
Now, time to add furniture and pretty items. One you buy your items, click on them like you would to put them in your shop, S.D.B, etc. Click "put in neohome". You have to buy furinture first, you can buy some from:
After you have to put it into the room selected, then move over to View Rooms or Gardens and click on your room. You can now click and drag your items where you want them.
This is the end of the guide. I hope it helped. :)