Cheat Sheet

Home Buying Kit For Dummies

From Home Buying Kit For Dummies, 5th Edition by Eric Tyson, Ray Brown

Buying a home can be as terrifying as it is exhilarating and satisfying. This Cheat Sheet offers 20 of the top home-buying tips from the professionals. And it also gives you a monthly mortgage calculator to see how much house your budget can afford.

Copyright © 2012 Eric Tyson All rights reserved.

Top 20 Hints for Home Buyers

You can never have too much information when shopping for your home. This comprehensive list was developed by real estate professionals to help you maximize your home buying experience. From looking at your budget to examining closing costs, this list can assist you from start to finish.

  1. Buy a home that comfortably allows you to accomplish your other financial goals. Understand how the proposed home purchase fits into and affects your existing financial situation and goals, especially saving for retirement.

  2. Get your personal finances in order before you buy. You should make your saving, investment, and insurance plans before you buy.

  3. Mortgage lenders and real estate agents can’t tell you how much you can afford to borrow. They can only tell you the maximum that you’re eligible to borrow.

  4. The best time to think about selling your house is before you buy it. Be sure that the home you buy has features other buyers will find desirable, or you won’t be able to get a good price when you sell it.

  5. Real estate is a good long-term investment. However, home values go through up periods as well as down periods. If you’re a homeowner during most of your adult life, your home should enjoy a healthy appreciation of value.

  6. Consider renting if you think you’ll soon need to move. Given all the costs associated with buying and then selling a home, if you don’t expect to hold on to your home for at least three (and preferably five) years, you could very well lose money.

  7. Have the courage to be a contrarian. The best time to buy is usually at the bottom of a real estate cycle when no one else thinks it’s a good time to buy. Compare the monthly costs of renting a home to buying it to see whether buying offers a good value.

  8. You can easily save thousands of dollars by shopping around for a good mortgage. Money is a commodity, just like toasters and toilet paper.

  9. Choose a mortgage that fits your needs and ability to accept risk. Don’t take an adjustable-rate mortgage unless you can afford the maximum possible monthly payment and the risk of fluctuating payments.

  10. What you don’t know is usually what gets you into trouble. Real estate is a team sport. Put the right players on your team and you greatly reduce the likelihood of problems with your purchase.

  11. Invest the time to find the best possible real estate agent that you can. A patient, knowledgeable agent can add value to your home-buying transaction. A mediocre or lousy agent can be a liability.

  12. Remember that real estate agents, mortgage brokers, and other players only get paid if you buy, and they generally get paid more the more you spend on a home. To protect yourself against these conflicts of interest, get your financial house in order before you start working with these players.

  13. Buying a home is an emotional experience for most people. The better job you do of controlling your emotions, the more likely you are to control the transaction and get a good deal.

  14. Beware of fake sellers trying to peddle overpriced houses. Learn how to spot counterfeit sellers before you waste your precious time and money on them.

  15. “What’s it worth?” is the most important question to answer when buying a home. Examine sales of comparable homes (a good agent can assist you) to answer this question.

  16. There are no absolutes in real estate negotiation. Smart buyers realize that there are times to make a low-ball offer and times to make your first offer the highest offer you can afford. And remember that everything is negotiable.

  17. If the deal you’re getting on a home, mortgage, or any other aspect of a home purchase seems too good to be true, it probably is. Find out why the home or mortgage is so cheap or suffer the consequences later.

  18. Never buy a pig in a poke. Don’t try to save money by skipping inspections. Have the home thoroughly inspected before you buy it. If in doubt, reinspect.

  19. Buy the most comprehensive homeowners insurance policy you can. Make sure that you have coverage for catastrophic risks, such as earthquakes or floods, that may occur in your area.

  20. Don’t let unexpected closing costs sabotage you. Ensure that you have enough cash to buy the home by estimating in advance all the costs you must pay at the time of closing, including moving expenses, insurance premiums, loan fees, and property taxes.

Monthly Mortgage Payment Calculator

Using this mortgage payment calculator table, you can calculate the size of your mortgage payments based on the amount you want to borrow, the loan’s interest rate, and the length (in years) the mortgage payments last. To determine the monthly payment on a mortgage, simply multiply the relevant number from the table by the size of your mortgage expressed in (divided by) thousands of dollars. For example, if you take out a $150,000, 30-year mortgage at 7.50 percent, multiply 150 by 7.00 to arrive at a $1,050 monthly payment.

Interest Rate 15-Year Mortgage 30-Year Mortgage
4 7.40 4.77
4⅛ 7.46 4.85
7.52 4.92
4⅜ 7.59 4.99
7.65 5.07
4⅝ 7.71 5.14
7.78 5.22
4⅞ 7.84 5.29
5 7.91 5.37
5⅛ 7.98 5.45
8.04 5.53
5⅝ 8.11 5.60
8.18 5.68
5⅝ 8.24 5.76
8.31 5.84
5⅞ 8.38 5.92
6 8.44 6.00
6⅛ 8.51 6.08
8.58 6.16
6⅜ 8.65 6.24
8.72 6.33
6⅝ 8.78 6.41
8.85 6.49
6⅞ 8.92 6.57
7 8.99 6.66
7⅛ 9.06 6.74
9.13 6.83
7⅜ 9.20 6.91
9.28 7.00
7⅝ 9.35 7.08
9.42 7.17
7⅞ 9.49 7.26
8 9.56 7.34
8⅛ 9.63 7.43
9.71 7.52
8⅜ 9.78 7.61
9.85 7.69
8⅝ 9.93 7.78
10.00 7.87
8⅞ 10.07 7.96
9 10.15 8.05
9⅛ 10.22 8.14
10.30 8.23
9⅜ 10.37 8.32
10.45 8.41
9⅝ 10.52 8.50
10.60 8.60
9⅞ 10.67 8.69
10 10.75 8.78
10⅛ 10.83 8.87
10¼ 10.90 8.97
10⅜ 10.98 9.06
10½ 11.06 9.15
10⅝ 11.14 9.25
10¾ 11.21 9.34
10⅞ 11.29 9.43
11 11.37 9.53
11¼ 11.53 9.72
11½ 11.69 9.91
11¾ 11.85 10.10
12 12.01 10.29
12¼ 12.17 10.48
12½ 12.17 10.48
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