How to Buy a House home
Learn the basics
1.	The Basics
2.	How much home can you afford?
3.	The Down Payment
4.	The Loan
-	Assuming a Loan
-	Owner Financing
5.	Qualifying for a loan
6.	Understand Closing Costs
Do the groundwork
7.	Get your finances in order
8.	Clean Up Your Credit Record
9.	Establish Credit if you don't have any
The Process
10.	Find a Lender
11.	Evaluate the bank's offer
12.	Start looking at houses
13.	Get the Disclosure
14.	Make an offer / Sign a Contract
15.	Have the House Inspected
16.	Problems on the Inspection?
17.	Renegotiate the terms
18.	Appraisal, Survey, & Insurance
19.	Appraisal went through?
20.	Closing!

After the purchase

Avoding scams

More about Mortgages

How much loan can you get?

Figuring your monthly pmt.

15- vs. 30-year loans

Prepaying your mortgage

Understand Compound Interest

Private Mortgage Insurance

If you won't live long enough to pay off the mortgage

Other Topics

Renting vs. Buying: Which is better?

Paying cash vs. getting a loan

The Debt Ratio

Tax breaks are actually welfare for the rich

Other

Links to helpful sites

Fan Mail

Michael Bluejay's home page

Email Me

How to Buy a House

Easy-Qualify loan in Austin 0% down Michael Bluejay (the author of the website) is offering loans to homebuyers in Austin, Texas. Here are the terms: Your credit does not matter, but your ability to pay does. No down payment is required, though you can make a down payment if you like, in order to lower your monthly payments. Your monthly payment will be about 1.15% of the purchase price, including closing costs, taxes, insurance. (e.g., on a $100,000 home, the payments would be about $100,000 x 0.0115 = $1150/mo.). The interest rate is 10%, and I do not require private mortgage insurance. We'll roll most of the closing costs into the mortgage, so they'll be part of your monthly payment, and you won't have to come up with a bunch of closing cost money at the time of the sale. If you already have a high-interest mortgage and would like to refinance at 10% for 30 years, I can do that too. These loans are available for homes in Austin, Texas only. If you're able to get a bank loan you should do so, because the interest rate will be lower. My program is intended for people who cannot get a loan from a bank. Note that you're not married to the higher interest rate forever. If you start fixing your credit with my credit repair instructions, you should have good enough credit to move your loan to a bank in two years -- and get a lower interest rate. Contact me at (512) 322-0638 or use the form below. This box is for inquiring about the above mortgage offer ONLY! If you send anything else (especially requests for help/advice) it will be deleted on sight. For those inquiring about the mortgage offer, don't forget to include your phone number or email address so I can contact you!)

Figuring the monthly payment on a mortgage

Your monthly payment includes more than just the payments on the loan! If your down payment was less than 20% then you'll also pay for Private Mortgage Insurance. And either way, you'll also pay for taxes and insurance. Many mortgage calculators don't include these amounts, which makes them kind of useless. Our calculator gives you a more realistic picture of your real total monthly obligation. Monthly Payment calculator -- rough estimate 15-yr. 30-yr. $ $ Home Price 0% 3% 5% 10% 20% $ 0% 3% 5% 10% 20% Less Down Payment $ $ Loan Amount 5.5% 5.75% 6.00% 6.25% 6.50% 6.75% 7.00% 7.25% 7.50% 7.75% 8.00% 8.25% 8.50% 9.00% 9.25% 9.50% 10.00% Other... 5.5% 5.75% 6.00% 6.25% 6.50% 6.75% 7.00% 7.25% 7.50% 7.75% 8.00% 8.25% 8.50% 9.00% 9.25% 9.50% 10.00% Other... Interest Rate $ $ Monthly Payment to Bank $ $ Private Mortgage Insurance (required when down payment <20%) $ $ Taxes & Insurance, monthly 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% $ $ Total monthly obligation   Summary What's this? The calculator above gives you a rough estimate of your monthly payment. If you came to this page first, what might be more useful to you is our calculator for how much home you can afford. Buy even if it costs more than renting. As we saw on the Basics of Buying and the Rent vs. Buying pages, it's usually better to buy, even if your monthly payment winds up being quite a bit higher, as long as you can afford it. The benefits of ownership pay off in the long run. What to enter. You can change the values with the blue border. Everything else is calculated automatically. Assumptions & Calculations. The "Monthly Payment to Bank" is perfect -- it's not an estimate. See below for how it's calculated. The "Private Mortgage Insurance" is an estimate. "Taxes and Insurance" are assumed to be 2% of the purchase price annually, though you can change that figure. (You'll need to research property tax and insurance rates in your area to get a more accurate picture.) We divide the annual cost by 12 to get the monthly cost. Note that maintenance is NOT included in this calculator. I generally assume that maintenance costs are 1% of the purchase price per year, or an extra 0.083% per month. Figuring the payments on a loan You can use a spreadsheet program to figure out the payments on a loan. Open up your trusty spreadsheet software (Excel, ClarisWorks, etc.), and type in the following: =PMT(A%/12,B,C) Instead of typing the letters A, B, and C, use these figures instead: A = Enter the interest rate of the loan. Note that the formula divides it by 12 because you want the monthly interest rate, not the yearly interest rate.) B = Enter the number of months you'll be making mortgage payments: 180 for a 15-year loan, or 360 for a 30-year loan. C = Enter the amount of the loan. This is the price of the house, minus the down payment, plus closing costs (if you're rolling the closing costs into the loan). Note that the result is a negative number. Don't worry about that. If it bothers you, put a minus sign between the = sign and "PMT". Here's an example. Let's say our home costs $140,000. We're putting 5% down ($7,000), so we'll only need to borrow $133,000. But we're rolling the closing costs ($6,000) into the mortgage, which takes it back up to $139,000. Our interest rate is 8% and it's a 30-year loan. So we've got: =-PMT(8%/12,360,139000) And our answer is $1020 a month. But wait, your mortgage payment also includes taxes and insurance. To find amount of the taxes, call the County Tax Assessor. To find the cost of insurance, call an insurance agent and get a quote. Let's say that taxes are $2500/year and insurance is $1100/year. That's $3600/year together, or $300/month. So your total monthly mortgage payment is $1320 ($1020 from what we figured earlier, plus $300 for taxes and insurance.) One more thing: If you put less than 20% down, you'll probably have to pay for Private Mortgage Insurance (PMI). PMI generally costs about 1/3700th to 1/1500th the price of the home. (On a $120,000 home, you'll pay $32 to $80/mo. for PMI). Using this formula to pay off a loan early You can use this formula to figure out how much you have to pay in order to pay your loan off early. For example, let's say you're five years into a 30-year mortgage, and you want to pay the loan off in another 13 years instead of another 25. Just enter in the principal remaining on your loan (should be listed in your coupon book or on your mortgage statement), and use the number of months you want to pay it off in (in this case, 13 years x 12 months/year = 156 months). =PMT(8%/12,156,80000)

Related topics: How much home can you afford? How much loan can you get? Basics of buying a house