Youve been living in an apartment for years. Each month you write out a check and know that your money will never see any type of appreciation. You cant deduct any of your rent from taxes, and at any moment the landlord could sell the building. Maybe its time to consider buying your own home. If youre financially stable, a home can be a great investment and also something thats wholly yours.

Credit Issues

Before you go to look at houses, get a copy of your credit report. Now is the perfect time to make sure thats in order. Clean up any errors before you try to prequalify for a mortgage. Even if your credit isnt great, you may still qualify for a federal mortgage a homebuyers program in your neighborhood. Alternatively you might look into a HUD home where your payments are likely to be lower.

Using a Broker

A lot of people wonder if they should get a real estate broker to help with house hunting. Brokers are highly recommended particularly for first time home buyers. There are a lot of technicalities to purchasing a home from the financial end, to a forest worth of paperwork and knowing fully about various areas where youre considering living, a Real Estate agent can help you navigate more confidently. Additionally, an agent can assist with determining your budget and what type of mortgage would be best for you.

Cash In Hand

First time home buyers often wonder how much money they need to have to buy a home. Unfortunately theres no pat answer to that question. Various factors go into the monetary question including:

• down payment
• earnest money (this is a deposit made at the time of your offer)
• type of mortgage
• whether you closing costs are rolled into the mortgage (if not thats about 3-4% of the total price of your home)
• points

If youre getting a federal loan youll need about 3% as a down payment. However, other types of mortgages require much more, up to 20%. This is another area where your real estate agent can guide you.

Prequalification

Every real estate agent will offer you the opportunity to get pre-qualified for a loan. This is very helpful to you, particularly in a sellers market. Offers from people who are not prequalified are often put to the bottom of the heap because sellers want to know that they can move their home quickly. Note that your agent can also help you shop your loan to find the best interest rate possible.

Other Home Owner Costs

In determining how much of a mortgage you can afford, remember that you have other regular bills to pay. Sellers can provide you with a feel for utility costs, and the broker can give you the total in property taxes annually. Theres also food and other necessities. Credit counselors agree that you should not carry more that 35% dept-to-income ratio. Use that baseline as a guide.

To give you an example. Say you have a car payment of $350.00 a month. On top of that youre carrying a $200 credit card payment. Utilities and food run another $500 a month, and you earn $4,000 a month before taxes. A healthy credit-to-debt ratio is no more than $1,750 a month in payments. That means you can afford about $700.00 a month in mortgage.

What to Expect at Application:

When you apply for a mortgage youll be given a list of items you need. Bring your social security numbers, 6 months of checking and savings account statements, proof of investments, proof of earnings, a complete list of debts (and the account numbers), and two years of income tax statements.

Offers and Rejections:

In coming up with an offer on a house the overall condition of the home, the real estate market, and the value of the home all play a role. Houses that have been on the market longer typically have more wiggle room as the sellers are likely to be anxious to move their home. Competing with other bidders also plays a role, usually meaning your first offer will be a little higher than it might be otherwise. Again this is something your agent should help with.

If your first offer is rejected you can come back with a counter offer. This is a normal part of the negotiation process. In some cases, the seller will ask for certain considerations (such as helping with closing costs). The key to this process is making sure you dont offer more than the house is worth, or more than you can really afford to spend.