For Buyers

A home is probably the biggest financial investment you’ll make in your life. Before you get started, do some homework. This handy Buyer’s Guide will show you some things to keep in mind as you’re hunting for that home of your dreams.

Determine How Much You Can Afford

How much house you can afford is largely dependent on how large a mortgage – basically, a home loan — you can handle. Start your research by using the simple mortgage calculators I have on my website to see whether you can afford to pay the monthly mortgage on the kinds of houses you have in mind.

You may even apply for a mortgage at a lender before you start looking for a home. This is called getting pre-qualified for a loan; it will tell you exactly how much you can afford and may make the closing process go faster.

But, remember that owning a home involves more than a monthly mortgage. You’ll also have to consider money you’ll need to have at hand when you make an offer, when you close on a home and on a monthly basis after the home is yours.

Payments you may have to make when you submit an offer and at closing include:

Earnest money, usually 1% to 5% of the cost of the house, which you pay as a deposit on the house when you submit your offer. It’s your proof that you’re a serious buyer down payment, usually 10% to 20% of the cost of the house, which you must pay at closing.

Mortgage insurance, paid by borrowers making a down payment of less than 20%.

Closing costs, usually 3% to 4% of the cost of the house, to pay for processing all the paperwork.

Don’t forget the day-to-day expenses you may incur once you own that home. This includes:

• Utilities
• Homeowner or condo association dues
• Property taxes
• City or County taxes

When purchasing a home—whether it’s your primary residence or a second home—it’s a good idea to meet with several sales professionals before choosing one to represent you. Use these interview questions as a starting point for these discussions.

• What can I afford to pay for a home?
• Will the sales professional act as a Buyer’s Agent?
• Does the sales professional have special training?
• Has the sales professional earned any professional designations, such as Accredited Buyer Representative^® (ABR^®)?
• What is the difference between mortgage prequalification and mortgage pre-approval?
• What are the key features I must have in my new home?
• What features would I like to have?
• How will the sales professional help me evaluate and compare the homes I look at?
• Can the sales professional provide an overview and copy of the local standard Contract for Sale and typical addenda?
• What inspections does the sales professional recommend for the property I’ve selected?