So you've been online dreaming of buying a new home. It may be your first home, you may want a bigger home or it may be time to downsize... No matter what there are many things to consider when it comes to to taking that step.
First of all... are you pre-qualified for a loan? In other words, have you talked to a mortgage lender to find out up front on your ideal price range. (If you don't know a lender, contact your REALTOR for lender referals). Your lender will help you determine your maximum loan amount and if there are any credit issues you should address or correct before buying. Upon pre-qualifying your lender will issue you a letter to present to your REALTOR and to a seller upon making an offer.
Now you need to think about the down payment...Depending on the type of loan you qualify for will depend on the amount of money you will need for your down payment. There are some loans that are 0% down, which requires specific qualifications. FHA loans require as little as 3.5% down as well as some conventional loans that require up to 20% down. Shop around, ask questions, ask your REALTOR if they can refer lenders to help you through this process.
Taxes and insurance will usually be escrowed and made a part of your payment. Make sure your lender calculates this on top of the principle and interest payment they quote you. You don't want any "surprises" later on when you find out the payment is $400 more a month than anticipated due to taxes and insurance.
Lastly, Closing Costs.... No matter what home you buy, there will be closing costs. These can include: lender fees, title insurance premiums, escrow fees, attorney fees, document preparation fees, recording fees, appraisal fees, survey fees, inspection fees, etc. These are normally fees that are to be paid upfront at closing, however sometimes you can roll some of the fees into your mortgage.
As you can see, there are many things to think about before shopping for a home. Getting through the first phase of the lending process can be confusing however, once you get through this phase, it's time to shop for a home! Now you are ready!