Information for Buyers

10 Steps to Prepare for Homeownership

1. Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
   
   
2. Develop a wish list of what you'd like your home to have. Then prioritize the features on your list.
   
   
3. Select three or four neighborhoods you'd like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.
   
   
4. Determine if you have enough saved to cover your downpayment and closing costs. Closing costs, including taxes, attorney's fee, and transfer fees average between 2 percent and 7 percent of the home price.
   
   
5. Get your credit in order. Obtain a copy of your credit report.
   
   
6. Determine how large a mortgage you can qualify for. Also explore different loans options and decide what's best for you.
   
   
7. Organize all the documentation a lender will need to preapprove you for a loan.
   
   
8. Do research to determine if you qualify for any special mortgage or downpayment-assistance programs.
   
   
9. Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.
   
   
10. Find an experienced REALTOR who can help you through the process.

Common Closing Costs for Buyers
The lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier's check. The title company or other entity conducting the closing will tell you the required amount for:

• Downpayment
  
  
• Loan origination fees
  
  
• Points, or loan discount fees, you pay to receive a lower interest rate
  
  
• Appraisal fee
  
  
• Credit report
  
  
• Private mortgage insurance premium
  
  
• Insurance escrow for homeowners insurance, if being paid as part of the mortgage
  
  
• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
  
  
• Deed recording fees
  
  
• Title insurance policy premiums
  
  
• Survey
  
  
• Inspection fees--building inspection, termites, etc.
  
  
• Notary fees
  
  
• Prorations for your share of costs, such as utility bills and property taxes
  
  

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