Financing
Now that you know what you want in a home, you need to find out what you can afford. There are two ways to go about this: prequalification or pre-approval for a loan.

Prequalification is the simpler of the two processes. It can even be done online or over the phone and will give you a rough estimate of how much of a loan you can afford. When you contact a mortgage company, they will ask you for some basic information about your finance. How much money you earn? What is your debt load?

Pre-approval is more a more in-depth process. The lender will perform an extensive check of your finances including your credit rating, whether or not you're a first-time buyer, what your debt load is, how much money you have to put as a down payment, etc. This figure will be a much more reliable estimate of what you can afford.

In most markets, pre-approved buyers are preferred over those that are merely pre-qualified. Being pre-approved lets the seller know you have gone through an extensive financial background check and there should be no unexpected obstacles to you buying their home.

The following questions can help you define a basis for determining your financing needs.

• How much mortgage can I afford?
• What down payment is needed?
• What would the payments be?
• What is included in a mortgage payment?
• What closing costs will I incur?
• Would an ARM mortgage instead of a fixed rate mortgage save me money?
• How do 15- vs. 30-year terms compare?
• What is mortgage insurance and is it required?
• What type of documentation will I need?
• How long will the mortgage process take?
• What is being locked-in?
• When would the payments begin?