House Buying For Newbies - Part 1

Start by choosing one or more sources from this article and start making your contacts. If you are not able to find a certain source, go to your Library and take a look at the Catalog of Federal Domestic Assistance, this is basically an index of all Government programs and is updated every six months.

Next, Start making contacts by either calling or writing to them and asking for all the information for the agencies criteria. At first, do not ask too many questions on your first request. Keep your request strictly to asking for applications and guidelines.

If your contact tells you they cannot help you, just ask if you can be referred to an agency that can. They may or may not know. Not everyone knows what the government has available. In order to make the right contact it may take a few phone calls or letters. Don’t make any enemy's in your pursuit. It may look like you are getting the run around, but the only way you can succeed at this is to be friendly and offer an upbeat attitude to everyone you talk to.

How Much Home Can You Afford?

The first step in the home-buying process is to determine how much home you can afford. Lenders use certain criteria to determine this amount and you will learn what they are. After all, you don't want to be wasting your time looking at 150,000 dollar homes when what you can afford is a 100,000 dollar home. But don't worry, this article will show you how to get the most home for your dollar as well.

Keep in mind that just because you qualify for that amount, it does not mean you can afford to be comfortable with those monthly payments. You need to consider your particular circumstances and your future financial needs and goals.

Get Pre-Qualified

This is one of the best things you can do. By being pre-qualified you will be able to act immediately if you find the perfect home in your price range.

By prequalifying you will be able to determine how much house you can afford. It is very easy to do and will speed up the negotiation process.

There are five things the lender will need to have to pre-qualify you.

Your annual household income,

Your current debt balances (credit cards, car loans, etc.)

Your work history

Amount in savings &

Amount in your checking account

If you are not ready to call a mortgage lender, you can determine how much home you can afford using the information below.

How can you calculate how much mortgage you can afford?

As a rule of thumb, many people estimate they are able to afford a mortgage of 2 or 2½ times their household income. For example, if you annual income is $30,000, you might be able to afford a mortgage of $60,000 to $75,000:
$30,0000 X 2 = $60, 000.