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Buying a House 101
How to Prepare to Purchase a House 1. Know Your Budget Before looking at homes, understand: Monthly income Monthly expenses Debt obligations What monthly payment feels comfortable Remember: Your payment may include:
Pre-Approval
A lender's written estimate of how much you can borrow based on your income, credit, and debt.
Pre-Qualification
A basic estimate of what you may qualify for (less detailed than pre-approval).
Down Payment
The money you pay upfront toward the
purchase price of a home.
Closing Costs
Fees paid at closing (lender fees, title fees, taxes, insurance, etc.).
Earnest Money
A deposit showing you're serious about buying the home.
Contingency
Conditions that must be met for the sale to move forward (inspection, appraisal, financing).
Appraisal
An independent value of the home ordered by the lender.
Inspection
A professional check of the home's condition (roof, plumk 7, electrical, etc.).
Escrow
A neutral third party that holds funds and documents until closing is complete.
Underwriting
The lender's process of reviewing your financials to approve the loan.
Debt-to-Income Ratio (DTI)
How much debt you have compared to your income.
How to Prepare to Purchase a House 1. Know Your Budget Before looking at homes, understand: Monthly income Monthly expenses Debt obligations What monthly payment feels comfortable Remember: Your payment may include:
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Pricing Price based on recent comparable sales ("comps") • Look at similar homes that have sold in the last 3-6 months in the same neighborhood. • Focus on homes with similar size, age, condition, and features. Don't price bas
How to Prepare to Purchase a House 1. Know Your Budget Before looking at homes, understand: Monthly income Monthly expenses Debt obligations What monthly payment feels comfortable Remember: Your payment may include:
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