Buying a home is not just about pricing and negotiation. A great deal of the process has to do with how well--or how poorly--a buyer is prepared for making the purchase. This preparation does not need to take a great deal of time, and most of it can be done from the comfort of your current home or office, but it is important to spend some time getting ready before running off to look at specific homes. On this page you will find answers to common questions regarding the buying process. Be sure to check back with my site frequently, as I am constantly adding more information.

1. Is a Pre-approval Letter Necessary?

Yes. Getting a pre-approval letter from a lender before you start looking at homes tells sellers that they are dealing with a qualified buyer when you present an offer, and you won't waste time, or fall in love with a home that is beyond your price range.

2. How much house should you buy?

The answer to this has a lot to do with your income and the amount of your debt load. As a rough rule of thumb, most home buyers purchase houses that cost between 1 1/2 and 2 1/2 times their annual income. For example, a home buyer earning $40,000 per year would buy houses costing between $60,000 and $100,000. There is, however, a degree of variation due to the individual market prices of the area in which you are interested. In some areas, there may not be houses available within that range, so you may need to spend a bit more. In general, however, your monthly mortgage payment cannot exceed approximately 28%-29% of your gross monthly income. Your total debt payments (car payments, credit card payments, etc. plus the monthly mortgage amount) cannot exceed approximately 36%-40% of your gross monthly income. These ratios will depend on the type of mortgage for which you are applying.

3. Why should you use an agent to buy a house?

Technically, you don't need an agent to buy a house, but it is a good idea for two reasons. First, in virtually all situations, the buyer does not pay a commission, so the services of an Agent working for you are paid for by the seller. Second, without an Agent, you may be missing valuable representation of your interests.

4. How can you be certain that you are getting a good deal on a mortgage?

In a word: Compare. There is a good deal of variation in the mortgage market, not only from week to week, but from lender to lender. Many newspapers list current mortgage rates for your local area in their Real Estate sections, often on Saturday or Sunday. Check them. I will provide you with several lenders names and numbers.

5. How much should you offer for a house?

There is no simple answer to that question, since each property stands on its own. A particular house may be overpriced (you should make an offer BELOW the listing price), "on-the-money" (you should make an offer at or just below the listing price) or under priced (you should grab it before someone else does!).

6. Why should you spend the money to have a home inspection?

This is vital. The $350 to $500 that a professional home inspection costs could be the best money you ever spend on your house. Not only does the home inspection seek out any defects (and gives you some peace of mind), the home inspector will often give you tips on maintaining and repairing your house. I will provide you with several names and numbers of reputable inspectors.

7. Why will you need an appraisal?

An appraisal is an opinion of value of the home you want to purchase. Virtually every lender will require some sort of appraisal before the loan is approved.


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