Guide for First Time Home Buyers



The following are some basic tips for preparing a first time home buyer.
• It saves a great deal of time and trouble if you been pre-qualified for a mortgage to
accurately determine how much you can qualify for when buying a home. You don’t wast
time looking at homes you can not afford or worse, you lose out on a home you really want
because you have not qualifies for a loan.

Financing

As a general rule, a family can afford a mortgage equal to about twice their annual
household income.
     • The mortgage payment usually consists of PITI which is principal, interest, taxes and
insurance. Most lenders require that the monthly payment be no more than 25% to 28%
of a borrower’s gross monthly income.
     • When comparing the monthly costs of owning vs renting, remember to consider the
mortgage interest and property taxes you, as a property owner, can deduct from federal
income tax.

Closing costs related to the final phase of purchasing a home need to be planned for.
With a new loan, closing costs can amount to between 1% and 3% of the purchase price.
This is a cost in addition to your down payment.

Advice to count on


• Even though you think you will keep your new home forever, choose wisely, keeping resale
in mind. This includes thinking about location, neighborhood, location, schools, location,
convenience and location.
• Use a Realtor. Choose one you are comfortable with and work with that person. An
experiened Realtor can be a tremendous help in answering questions, negotiating and in
general guiding you through the process.