How to Purchase a House

1- Find out what your monthly take home pay is without overtime or bonuses.

2- Calculate  approximately what your monthly bills are each month besides electricity, gas/oil bill because these will be different in a house.  These bills should include food, gas for a car and miscellaneous items like maintenance on a car or toiletries for your home.

3- Subtract your monthly expenses from your monthly take home pay to  see what you are working with. Be firm with what you can afford.

4- Now that you know what you can afford each month in a mortgage payment, how much SAVINGS do you have? It’s very important to have a minimum of 5% of the price of the property to put as a down payment, preferably 20%.  Twenty percent down will help you to avoid paying P.M.I. which is mortgage insurance and is not tax deductible.  Most people who don’t have the 20% to put down usually get what’s called a piggy back mortgage or second mortgage, this is a smaller mortgage that covers the extra percentage you need to avoid P.M.I.. The piggy back mortgage is tax deductible. 

5- Don’t forget the dreaded Closing Cost! if you have an owner that’s motivated to sell, see if you can negotiate with the owner for him/her to pay the closing cost.  Closing Costs usually run on average between $8000 and $15000 and all money that will have to come out of your SAVINGS, so if you can get the owner to pay for it, that will be a big plus for you.

6- You think you have enough SAVINGS? Ok let’s move on.  Now, you should research the various neighborhoods you want to live in. You may want to visit them and  look online at the price ranges in those neighborhoods. 

7- Now that you’ve found the neighborhood you want to live in, you need to go and get pre-approved for a loan, I recommend talking to at least three different Mortgage bankers, and when you sit down with these bankers make them break down the numbers to you, and remember what you can afford each month.

8- After you get pre-approved, now you have to go see a Real Estate agent. Be very clear on what you want and what price range your looking at.  Remember, a real estate agent makes money off of you, so don’t let them push you into a price range that you are not comfortable with. They don’t lose money if you can’t pay your bills, only you do.
When going around looking at different homes, ask the owner questions on how much electricity costs a month, how much is the oil or gas bill, just so you can get an idea and add it to your budget.

8 - Just try and remember, the house buying process can be long and arduous but in the end you are a homeowner and that feeling you just can’t beat.

RECAP:

Approximate your monthly take home
Approximate your monthly bills
Make sure you have enough SAVINGS
Research neighborhoods you want to live in and prices
Get pre-approved for a loan
Meet with a Real Estate Agent