There are several things you need to think about before you apply for your loan!
For example - How much money will I have to come up with to buy a home.
Answer: The amount of money you have to come up with depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money - (1) the deposit you make on the home when you submit your offer to prove to the seller that you are serious about wanting to buy the house; (2) the down payment, that part of the cost of the home that you must pay when you go to settlement or closing; and (3) closing costs, the costs associated with buying a home and obtaining a loan.
When you make an offer on a home, you will have "earnest money" (also called a "good faith deposit". If your offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies. If you buy a HUD home, for example, your deposit generally will range from $500 - $2,000.
The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require that your down payment be 10% to 20% of the purchase price. That's why many first-time homebuyers turn to HUD's FHA for help. FHA loans require only 3% down - and sometimes less. You can read more about FHA loan programs here: FHA loan programs.
Closing costs - which you will pay at settlement - average 3-4% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won't be caught by surprise.
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