It is exciting to buy your first home. However, financing your home purchase can be daunting. Both cases require you to do extensive research and shop carefully to find the exact items you are looking for.

It can be difficult to decide how much you want to spend on your home, what type of mortgage is best for you, and what the settlement process will look like. There are many resources that will help you prepare before you even step foot in a model home, sales office or open house.

• Learn the lingo. The NAHB’s Home Buyer’s Dictionary can help.
• Determine what you can afford to pay monthly. Keep in mind that you will have to pay escrows for property taxes and hazard insurance. A lender doesn’t have as much information about your daily living expenses as you do. Don’t compromise on that number. Calculators for mortgages can be used to calculate your monthly payments based on down payments and interest rates. You can find calculators on many real estate-focused websites.
• Pay off your debts. Credit card debt limits the amount you can borrow from a lender. Lenders require that your total debt service ratio is lower than 40% of your monthly income.
• Talk to a credit counselor, even if they are not working for a lender. It is possible to research all options without being influenced or influenced by anyone who has financial interests in the loan or home you select. The U.S. The U.S. Department of Housing and Urban Development (HUD), offers free counseling and seminars in housing.
• HUD also offers a helpful booklet called Buying your Home: Settlement Costs & Information. It explains the process and most of the expenses that you will face. This booklet is free of charge and lenders are required by the Real Estate Settlement Procedures Act to give loan applicants a copy. This information will help you shop smarter for settlement services.
• Once you have done your research, you are ready to go to a lender to understand the options available to you. You will also know the price ranges you should consider and be able to quickly move if there are multiple interested buyers. Although pre-approval by a lender is subject to final credit verification and satisfactory appraisals, it is a significant step towards becoming a homeowner.