Income. Debt. Down Payment. Closing Costs. Two Years Income Tax Returns. Assets. Liabilities. IRAs. Inspection fees? You want WHAT? Just what can I afford?

Buying a home in today s marketplace can be a bit intimidating.  Your new home purchase is likely to be one of the most important decisions you ve ever had to make. Usually, it s one of the single most valuable assets you will ever own.

Where to Start
Before you invest hundreds of hours searching--and to avoid any heartbreak if you find yourself unable to qualify for your dream home--sit down with a lender. Your lender can perform a simple verbal prequalfication in about twenty minutes and a full-fledged prequalfication in about 5 days. Ask your New Age Realtor for a lender referral if you don't know where to start!

Pre-qualification not only allows you to focus your search in the correct price range, saving a lot of wasted time and frustration, but it can also give you an edge when competing with other offers on a home that you find. If a seller is deciding between two offer, yours who has been qualified and another unqualified offer, they are much more likely to work with your proposed agreement. Pre-qualification will also give you leverage when negotiating with a seller in a non-competitive atmosphere; it essentially makes you a cash buyer.

The amount of home that you qualify for will be determined by three key factors: your ability to repay the loan, your debt-to-income ratio, the amount you have to put down and pay closing costs, and the property taxes on the home you wish to purchase. 

The Down Payment
Whereas a current homeowner can rely on equity from their home sale, a first time homebuyer is limited to the money they can save. The days of having to put 20 percent down on a home are in the past, although putting a large amount of money down definitely makes it easier to qualify for a mortgage and to get the lowest interest rates available. With the various programs that are available today, you can put as little as 3.5% down on a home using FHA financing, and 0% down using VA and USDA programs (in qualifying areas).  Properties must meet specific appraisal requirements.  See your New Age Realtor for more detailed information.

Qualifying for the Mortgage
There are two basic guidelines that lenders use to determine the amount of mortgage you are eligible for:

1. Your monthly mortgage payment of principal, interest, taxes and insurance (PITI) should not exceed 25 to 28% of your monthly gross income.  
2. Your monthly housing cost (PITI) plus other long-term debt should not exceed 33 to 38% of your monthly gross income.

• Closing costs generally will range between 2% to 6% of the mortgage loan, depending on the loan and lender. You will be provided with a "Good Faith Estimate" of closing costs so you can know what to expect.  
• "Points," which are one time charges equal to one percent of your loan amount, may be required by your lender at closing.  
• Your closing agent and/or attorney will charge a fee at the close of the sale.
• Some costs are required to be pre-paid prior to closing.  These can include inspection fees, one year of home-owners' insurance premiums, and/or flood insurance (if required by the lender).