STEP 1:
Do Your Homework

What Can You Afford?
Before you start house hunting, going to open houses, or talking to a real estate agent, you should take a look at your financial situation to figure out what you can afford.

• How much debt do you have? How much new debt can you afford to take on? How much money do you have in the bank?

• How much can you spend? Think about the costs involved: a down payment, closing costs, and monthly mortgage payments. Don’t forget property taxes or other costs such as condominium or homeowner association fees and moving expenses.

• Obtain a copy of your credit report (it’s free!) and check it for errors. (www.ftc.gov/bcp/conline/pubs/credit/repair.shtm)

• It’s also smart to understand your credit score. A higher credit score often translates into a lower interest rate on your mortgage.

• Roughly calculate how much house you can afford. A number of online calculators are available to help you get an idea.