So you've decided to buy a house ... now what??
The number one absolute most important thing is to first find out how much money you're willing to spend on your dream home, and how many money a mortgage company will give you (remember these two numbers might not necessarily match). Almost every real estate search site has a "calculate your mortgage" section that I strongly suggest you take advantage of.
*SPOILER ALERT*
Make sure you select the "factor in taxes and insurance" button otherwise your monthly payment will be wrong and you could end up be looking in a price range way above what you can afford. I live in NJ and with taxes and insurance we're looking at an additional 400-800 bucks a month depending on the area (I know I was taken aback too). That's a humongous difference when calculating your monthly payment, and intern the total price range you can afford.
A good mortgage calculator I can suggest is the one on Zillow - CLICK HERE - start with the number you think you can afford, add in your down payment, adjust the tax % accordingly ((what I did was I pulled up some houses for sale in the area we were looking at and calculated the property tax percentage and then averaged that number. In the Monmouth/Middlesex area of NJ we're looking at around 4.3% tax. Remember this is a rough estimate of the taxes you'll be paying. There are a lot of factors that go in to how the taxes are calculated and each house is different but for this rough calculation it'll work fine)) and waalaa ... your roughly calculated monthly payment pops out! If you think that monthly total is too much or too little, just play around with the home price you entered until you get something you're comfortable with. This will be your base price.
When you do begin your search, I always suggest you look around 20-25K above whatever that base price is. You can always negotiate the price down. People are always saying its a buyers market and everything in negotiable. They say it because its True!! Especially now-a-days! The buyer has much more control over what they pay. There are some houses on the market for years and when a seller gets to that point everyone is willing to work with you. Once you get to that point of making an offer your agent and the listing agent will be able to tell you how flexible the sellers are and how much they think you can push the bottom line price.
Another part of this is going to get pre-approved for a mortgage. Everyone's credit history is different and it's best to go get pre-approved for a mortgage to confirm the number you're thinking of is actually what you'll be able to get. Now remember sometimes those numbers are different ... you might be thinking you can afford in the 200K-225K range but the bank approves you for 275K! Don't run right out and bump up your base price now. Remember mortgages don't include many monthly bills like your cable, cell phone, heat, electric, netflicks, etc. You need to make sure you can cover all your normal expenses including your new mortgage payment.
For those of you who rent right now and have a set payment deducted for rent each month, calculating things will be easier for you as you most likely already pay utilities. If you are living with a family member or friend and do not payment rent I would work up a list of other expenses (such as: gas, heat, sewer, electric, etc.) so you have a good idea on exactly these will total a month. All it takes is a few minutes of sit down time with a home owner in the area you're looking to buy in to have them give you a good idea of what you'll be paying.
We'll go more in depth on mortgage options later on but for now this will give you a good starting point!!
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