Financing
The first step to buying a home is to get pre-approved for a loan. In this process, you can find out how much of a home you can realistically afford. We do not recommend shopping for a home without this step. The reasons are two-fold: first is to avoid possible disappointment; and second, to be in a stronger position when making an offer.
"How much of a home can I afford?"
The rule of thumb for housing expense is to keep it under 28%, i.e., take your gross income, multiply by 0.28 and divide by 12.
For instance, if your gross family income is $50,000, $50,000 x 0.28 / 12 = $1167, which means that you can afford to pay a monthly payment of $1167. How much of a home this translates to depends on what the applicable interest rate is, how much down payment you will put down, and how much the property tax and home insurance premium are.
Also, if you have other debt payments, in general you need to keep the total amount (all debt payments) under 36% of your income. In above example, it will be: $50,000 x 0.36 / 12 = $1500.
Once you have a general idea, go talk to banks and mortgage companies. FTC has a helpful worksheet online to compare loans.
"What is APR?"
When comparing rates, it is good to compare APRs as these figures take loan costs into calculation.
Helpful Links:
www.bankrate.com (Mortgage calculators, rates, etc.)
www.federalhousingtaxcredit.com (First time home buyer tax credit information)
http://www.mortgagenewsdaily.com/mortgage_rates/ (Mortgage rates)
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm (Credit Repair)