Get your finances in order

The first thing you should do is make sure you are financially ready to buy a house. In other words, you need to be debt free with a fully funded emergency fund. Be certain you can afford a new home by asking these questions:

• Can I make at least a 10% (preferably 20%) down payment?
• Can I afford a 15-year fixed rate loan?
• Can I keep the house payments at or below 25% of my monthly take-home pay?

If you answered "yes" to all three questions, then you can afford a house. Otherwise, Dave strongly suggests you wait to buy a home.

You want your new home to be a blessing, not a curse, right? Follow these simple guidelines and you'll keep Murphy and his 3 cousins Broke, Desperate and Stupid from moving in.

Getting a pre-approved mortgage

A pre-approved mortgage will increase your chance of getting the best deal when you buy your home. Here are some things to consider when you start this process:

• Set an appointment with a trusted mortgage professional.
• Get a good faith estimate breakdown of your mortgage which includes an estimate of the interest rate and payment.
• Use your good faith estimate to do some comparison shopping with other mortgage providers.

Save thousands by comparing loans from different banks. Don't just take the first offer you get. A pre-approved mortgage also helps keep you from shopping out of your price range and allows you to make an instant offer if you find that perfect home.

Keep in mind that a pre-approval is not the same as a pre-qualification, which is a very loose estimate based on many hypotheticals. A pre-approval is more involved and gives you a concrete loan amount that the bank has approved for you.

Here are a few things you will need before you get pre-approved:

• A copy of your most recent bank statements (checking, savings, and other accounts)
• Proof and balance of any retirement accounts (401k, IRA, etc.), mutual funds and stocks
• Most recent W-2
• Most recent paystub from your employer
• Driver's license

To get a good faith estimate, Visit Churchill Mortgage.

Extra expenses

Owning a home is a blessing that comes with extra costs in addition to the monthly mortgage payment. Being prepared for these extra costs will help you avoid your own personal mortgage crisis.

Here are some extra expenses that you may run into:

• Property taxes - The amount you'll pay depends on the location of your new home. Just know that taxes can add hundreds of dollars to your monthly payment.
• Utilities - If you're moving from an apartment or upgrading to extra square footage, you might be surprised by a higher utility bill.
• Insurance - Don't try and get around this cost. You need homeowner's insurance. It provides protection against fire and theft.

Remember to include these costs when you're evaluating your finances. If you don't, you're setting yourself up for an unpleasant surprise.

Make a list of the features you want your new home to have

Buying a home is a significant investment. You want to make sure that you and your family will be happy with your new home for years to come. If you make a list of the features you want in your new home, your realtor will be more equipped to give you better choices.

Here are a few questions you may want to consider. Do you want...

• A one or two-story home?
• To live in the city, suburb or country?
• A garage?
• Walk-in closets and large storage spaces?
• A big backyard for the kids or pets?

Be sure to bring your list when you meet with your realtor.

Finding the right realtor

A Realtor® that helps you buy a house is called a buyer's agent. Here are three good reasons why you need a buyer's agent on your side:

1. Typically, a buyer's agent won't cost you a penny! In most cases, the home seller pays the commission for your agent. That means you pay nothing to get expert help. You'd be crazy not to take advantage of that!
2. You can save thousands. A good buyer's agent will make sure you never pay more than you should and will represent you in price negotiations. You can almost guarantee the seller will have a realtor on his side to make sure you pay as much as you can for your home. During this process, it's not uncommon for a buyer's agent to save you thousands.
3. You'll save countless hours filing paperwork. If you try to buy a home on your own, you need to fill out the appropriate paperwork for all the regulations and laws specific to your city, such as the offer to purchase, inspection report, homeowner disclosure, counter offer, loan documentation, and a host of other documents. An agent will do all of this for you.

Make sure you get an exclusive buyer's agent, one who is exclusively loyal to you, the buyer.

Finding the right home inspector

It's important to find the right inspector before you go house hunting. You will feel less pressured to pick the first inspector you meet when you find the right home.

Just like realtors, not all home inspectors are the same. Some are better and more reliable than others. To find out if an inspector is reliable, follow these guidelines:

• Interview multiple inspectors, asking a lot of questions
• Ask friends, family and coworkers for recommendations
• Ask for references from the inspector
• Check the inspector's background
• Make sure they have a broad knowledge of home systems and structures, and they aren't a specialist like an electrician or plumber
• Ask how long they've been in the inspection business
• Look for an inspector that is independent, objective and has no relationship with the seller in any way
• Make sure the inspector will give you a complete report

Importance of location

Location, location, location! It's an extremely important detail of buying a home. If you are thinking about reselling sometime in the future, then you'll definitely want consider the location of your home. A house that normally goes for $250,000 might only be worth $175,000 if it's in a bad location.

Here are some things about location to consider:

• How close is the home to your office?
• Is the home in a good school district?
• Are you conveniently located near shopping centers, churches, etc.?
• Is the home in a low crime area?

Undisclosed Fix-ups

Don't expect every seller to own up to every physical detail that will need to be fixed.

Both you and the seller are out to maximize your investment. Conduct a thorough inspection of the home early in the process, looking for signs of damage or poor construction. Consider hiring an independent inspector to objectively view the home inside and out, and make the final contract contingent upon this inspector's report. This inspector should be able to give you a report of any item that needs to be fixed with associated, approximate cost.

Getting a property survey

A property survey will reveal boundaries, easements (the right for others to use your property) and encroachments. You need to know how much of the surrounding land is yours before you buy it.

The information revealed in a survey can be very valuable. For instance, it is not uncommon for some neighborhood lots to have a Public Utility Easement (PUE). A PUE gives a utility company the right to use a certain area of your property. If the utility company needs to put a large electricity pole in your front yard, a PUE gives them the legal right to do so. Needless to say, this could greatly decrease your home's value.

Getting a home inspection

A professional home inspection is a critical step in the home-buying process. Inspectors examine the home's condition and look for problems you may not have noticed.

When will the roof need to be replaced? Is the electrical wiring safe and up to code? Does the home have termites? Does the garbage disposal work? These are just some of the questions answered in a home inspection.

An inspection should review all cosmetic features, mechanical systems and the structural integrity of the home, such as:

• Roof and gutter
• House foundation, basement and crawl space
• Heating and air conditioning systems
• Electrical systems
• Plumbing
• Kitchen counters, cabinets, faucets, etc.
• Bathrooms

Making an offer & negotiating

At this stage, a realtor can save you a lot of money!

Your realtor has access to all sorts of information that will keep you from offering too much or too little on a home. Making the right offer on a home is difficult. To truly understand the process, a regular Joe would spend days finding and studying the information.

When negotiating, always use your realtor to communicate with the seller. Your realtor is your go-to person. He or she will advise you appropriately and make sure you don't get in over your head.

Listen to your realtor, but make the decisions yourself. Remember, you are the boss in the relationship.

Before you sign that mortgage

Again, make sure the mortgage is a 15-year, fixed rate mortgage and your down payment is 10-20% of the home's value. Also make sure that your house payment isn't more than 25% of your monthly, take-home pay. Now is not the time to throw caution to the wind just to get the house you want.

If you buy a house with nothing down and a huge monthly payment, you're inviting trouble to move into the spare bedroom. Slow down and realistically think through everything before you jump head-first into making this major purchase.

Avoid having your own, personal mortgage crisis. Get a mortgage you can afford.