First time home buyer help

How much house can I afford?

When buying a house, one of the most important questions you need to honestly answer is "How much house can I afford?" To answer that, take inventory of your monthly income versus your monthly debts, as well as how much money you have saved up, to determine how much you can afford to pay each month and how much you can put towards a down payment.

This is also the time to assess your future goals and plans to help you determine which loan product will best fit your needs.

For more information on affordability and choosing the right down payment, please read:

• How much house can I afford to buy?
• Down payment calculator: How much does my down payment need to be?
• The income you need to buy a median-priced home in 50 major metropolitan areas

Getting preapproved

One of the most important parts of the homebuying process is getting preapproved for a loan amount. Preapproval is important because it let’s sellers know you’re serious, and it gives you an accurate estimate for how much money a lender will allow you to borrow.

HSH.com has developed a five-part guide that will guide you through each step of the preapproval process: “Everything you need to know about mortgage preapproval.”

• Also see: Three big reasons a mortgage prequalification isn't enough to buy a home
• Shop for Lenders who can help you get preapproved

Picking the right mortgage

Every year, millions of people get a mortgage, even though they are complicated and anxiety-inducing. So how do you choose which mortgage is right for you?

First, you need to determine if you want your mortgage to have a fixed rate (a rate that never changes) or an adjustable rate (a rate that can move both up and down). Second, you need to determine how you plan to live in your home for. Determining your timeline will help you decide on both loan type and term.

To find out which mortgage is right for you, be sure to read:

• A brief guide to common mortgage types
• World’s most confusing mortgage terms
• Conventional versus FHA financing: Which is better?

Preparing your documentation

After your mortgage application has been approved, it’s time to prove your worthiness to your mortgage lender by supplying up to two years worth of documentation. Be prepared to gather past tax returns, pay stubs, bank statements, and more. If you haven't already, you'll also need to decide when to lock in your mortgage's interest rate.

To learn more about documentation requirements, read:

• The documents you need to apply for a mortgage

To learn more about locking your mortgage rate, read:

• Today's mortgage rates: Should you lock in?

Closing your loan

Once your documentation has been submitted and you have been approved, it’s time to close on your loan. This process can involve offers and counteroffers, and this will be the time you get your home inspected. When the contract is finally signed and your financing is in place, a closing date will be set. A final walk-though should be scheduled just prior to the closing to be sure nothing has changed since you last saw the house. When you move into the new house, you'll need to have homeowners insurance in effect.

There are a lot of costs and fees associated with closing your home loan. To learn more, read:

• Prepare for closing on a house
• Reduce closing costs on your home loan
• Which closing costs can I negotiate?
• Prepaid items vs. closing costs, what’s the difference?
• 3 ways to pick the best closing date