The first step is to get you pre qualified for a loan.  In this step a loan officer will get your information to be able to run a credit check and verify your income.  Your income combined with existing debt obligations (car loans, student loans, other credit balances) will show how much of a payment you can afford.

Your monthly house payment typically consists of 4 main things, Principle (the amount of the original loan amount that you will pay down each month), Interest (the amount you pay the bank for the loan each month), Taxes (a monthly portion of your annual property taxes that is set aside in an escrow account), and Insurance (a monthly portion of your annual home insurance premium.

When you see a home that you like I will help you prepare an offer for that home.  This offer is a contract that the owner of the property can accept or reject or counter offer.  A counter offer is a rejection of the offer along with a second offer proposing different some different terms which you then could either accept, reject or counter offer.

Some of the most important terms of an offer are the purchase price, contingencies such as inspection and financing, how much escrow money you are offering, any seller assistance with closing costs, and when you will take possession of the property.  The purchase price is also known as the contract sales price.  This is the amount your loan will be based on.  An inspection contingency offers you the opportunity to hire a third party inspector (typically the cost is around $450-600 for a typical single family home) to check out major systems and the structure of the house during a specified inspection period.  After you have you inspections completed you can then list the items you would like remedied that the owner can either have fixed or compensate you for the repairs either through a reduction in the purchase price or a credit at settlement.  The financing contingency gives you a specified amount of time to have the home appraised and for underwriting by the bank to take place to get an approval of your home loan.  If you have an unresolvable issue either with the inspection or financing during those specified time periods then you can get out of the contract and have your earnest/escrow money returned to you.  Earnest/escrow money is an amount of money you can offer to be held by my brokerage to show the seller you are committed to the transaction and if you fail to perform on the contract you may forfeit this money to them.  It is not always required.

You can also ask for the seller to assist with your closing costs.  This has become less frequent in the current market where buyers are competing for properties, but you could potentially ask for a higher purchase price that will essentially roll your closing costs into the loan.  I had one client this year who was able to do that and had to pay only about $250 to close his loan after his $5,000 in seller assistance had been applied.  The amount you can get varies by loan program.  FHA loans at minimum require you putting 3.5% of the purchase price into the deal so for a $150,000 that would be $5,250.  Your closing costs would be approximately $5,000 too, so if you were to get that amount as a seller subsidy you could leave your out of pocket at close to that $5,250.  For homes qualifying for USDA loans you could do 0% down, so in the case of the client I referenced earlier he could buy the property with very little cash.

Seller possession is another item for negotiation.  Often sellers will ask for a specified period of time to remain in possession of their property after closing to give them time to move.  By giving them this extra time it makes your offer more appealing to them.

If there is a multiple offer situation on a property we can use an escalation clause.  That allows you to increase the amount you will pay up to a specific limit within set increments about the next highest offer.  For instance if you offer $150,000 on a property you may be willing to go up to $165,000 in $500 increments.  So if the next highest offer is $151,000 that you can make the purchase price $151,500.

One thing to note about mortgages versus renting.  Mortgages are paid is arrears while rent is paid in advance.  So say it is October 31st when you settle on a home.  You would pay for mortgage interest on that one day, but then have your next payment due on December 1st which would cover your mortgage payment for expenses incurred in November.