10 Steps to Prepare for Homeownership

  • Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
  • Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.
  • Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.
  • Determine if you have enough saved to cover your downpayment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 7 percent of the home price.
  • Get your credit in order. Obtain a copy of your credit report.
  • Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.
  • Organize all the documentation a lender will need to preapprove you for a loan.
  • Do research to determine if you qualify for any special mortgage or downpayment-assistance programs.
  • Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.
  • Find an experienced REALTORÒ who can help you through the process.


How Big a Mortgage Can I Afford?

Not only does owning a home give you a haven for yourself and your family, it makes great financial sense, too.

This calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too.

Rent: _________________________

Multiplier: X       1.32

Mortgage payment: __________________

Because of tax deductions, you can make a mortgage payment—including taxes and insurance—that is approximately one-third larger than your current rent payment and end up with the same amount of income.

Owner-occupierWikipedia: An owner-occupier (also known as an owner-occupant or home owner) is a person who lives in and owns the same home.