Buying a home is an exciting time in anyone’s life. Whether this is your first time buying or you’re trading in your equity for something a little bigger, you’re bound to be overwhelmed with information about what you need. For novice buyers, here are the basics you need to know about buying a home:

Your Finances

The first question you’ll need to ask yourself is what you can afford. This factor is going to depend on home buying regulations and incentives in your area of residence, the current economics surrounding home buyership, and what your current financial situation looks like. Remember, it’s not necessarily about the big overall number; it’s about what you can afford to pay every month. Even if you’re approved for a large loan, that doesn’t mean you should spend the maximum amount. Keep in mind that you’ll typically also need 3% to 5% of the total purchase price to pay for closing costs upfront, and the bank will likely require a certain percentage (anywhere from 5% to 20%) upfront as a down payment.

Know Your Rights

In nearly every facet of life, we need to be careful of scammers and criminals out to make a quick buck and leave you high and dry. There are predators lurking around every corner, and home buying is no different. Before you sign anything or become involved in a deal where money is involved, educate yourself on what to expect from the pending transaction. Make sure you’re working with a licensed professional who will explain any contract to you and work to protect your rights as a homebuyer.

Secure a Loan

Homes are purchased mainly on pre-approval, with a financing clause in the contract you sign. This means that before you start looking at houses, your first stop should be at the bank or another lender. Here you will be expected to present information regarding your financial situation, including a background check and your current credit score. Any entries on a credit report will bring your credit score lower, and the lower your credit score, the harder it is to find a reasonable rate for a loan. Avoid lenders who prey on low credit scores; they will do everything they can to lock you into a high interest rate that is bound to sink you in the long run. If your application for a loan is rejected, be aware that you have a right to know why. You should always shop around and get different rate quotes from lenders before making your final decision. Be sure to ask for clarification on anything that is vague or that you don’t completely understand. Finally, if you are approved for a home loan, ask your broker which fees will be refunded if the sale is canceled.

Home Buying Programs

Depending on where you live, there are different government programs and incentives to encourage you into buying your own home. These programs are generally known as home buying programs, and vary widely from state to state. Look into state-specific information before you spend money you don’t need to spend. You can sometimes find tax incentives, low interest rate programs, and more if you qualify.

This guest post is from Allison with CreditScore.net, where you can find more information about raising your credit score so you can get a better mortate interest rate.