Shopping for a home
So now you really begin house-hunting. Your real estate broker will be able to find listings for you, based on your wish list. But don't stop there! You can do your own looking, and then ask your broker to show you the house. Start by with a foreclosure search. Pick up real estate flyers at local grocery stores and convenience stores. Read the real estate sections of your local newspaper. Drive around neighborhoods that interest you and write down addresses where there are "for sale" signs. Go to open houses. Try everything! And use our convenient home-shopping check list to help you compare the houses you see.
How much mortgage can you afford?
You can save yourself a lot of wheel-spinning if you take a minute to figure out how much mortgage you can afford. Generally, a lender will want your monthly mortgage payment to total no more than 29% of your monthly gross income (that's your monthly income before taxes and other paycheck deductions are taken out.) You also need to consider current loan interest rates. The lower the interest rate, the more expensive the home you'll be able to afford.
Choosing your real estate broker
Many different kinds of mortgages are available to you. Read about them, and make sure you understand the pros and cons of each. Your real estate broker can help you. HUD offers some special home buying programs. Also, many local governments offer special home buying programs to help low-income homebuyers. Shop around - you may be surprised at all your options!
When you make an offer on a home, it's a good idea to make your offer contingent on a home inspection, conducted by an independent authorized inspector. You will have to pay for this inspection yourself, but it could keep you from buying a house that will cost you far more in repairs, down the road. If you are satisfied with the results of the inspection, then your offer can proceed. If you aren't, You may want to negotiate, asking the seller to pay for certain repairs or asking for a lower price.
Your lender will require you to get an appraisal of the house you want to buy, to make sure it's worth the money that you're borrowing. You may select your own appraiser, or you may ask your real estate broker to help you take care of that.
Lenders require that you have homeowners insurance, to protect both your interests and theirs. Like everything else, be sure to shop around for insurance that fits your needs.
Settlement or closing
Finally, you've gone through the whole process, and you're ready to go to "settlement" or "closing." We know you'll be excited, but be sure to read everything you sign!