So like I said, I've been looking for a place for two solid years before I came across this place. With all the houses around me foreclosing and selling like hot tamales in the snow in Mexico, (does it snow there?) I figured that it would be an opportune time for me to look for my very own place. The interest rates were down, I had some savings, and I'm pretty damn handy so fixer-uppers wouldn't be a problem for me. Not to mention, the company I work for deals with construction, mold, water damage, etc., so if needed I had someone to call.

The first thing I needed to do was figure out what I could afford, or rather, how much money I could convince a lender to let me borrow. That's what it really is folks. Anyway, so my agent tells me to get a pre-approval from a lender. Sure, that sounds fairly easy. What the hell is that and what do I do? I don't know what I'm doing remember? Eventually, with help from the internet I figured out that it was just a sheet of paper from a bank or lender saying, "We could probably let you borrow this much". At this point I didn't know squat about the different companies out there so I went the way of the couch potato and said to myself, "Hey, that there Lending Tree commercial says they'll hook me up with a bunch of folks". So that's what I did. I signed up, filled in some boxes and pretty soon I had 3 or 4 notices in my email. The info from my skillful box filling helped them figure out where I stood and what I could afford. After looking at the offers I picked the one with the lowest points charged(1 point = 1% of the total loan) and promptly sent a pre-approval request, per my agent. A day later I got an email with the attached pre-approval letter and forwarded it to my agent. That one sheet of paper that barely has half a page of type on it makes you look much better when you put in an offer against people who don't supply one. But don't let the rates on that letter lock you into believing those will be your final costs. Things will change like the Fed raising interest, or even lowering it, and changes by the lender because of certain conditions you fall into. One such example is that you may have a high income to debt ratio, meaning that the amount you take home comes awfully close to the amount of bills and other obligations you have to pay. Lenders like to see something not higher that around 30%. That's not to say that you should give up if you have a high ratio. 30% is impossible for most of us anyway. It just means that you fall into those conditions I was talking about that makes it more likely your rates/charges will change. Ask you potential lender for a GFE or Good Faith Estimate that will estimate your charges line by line so you know what you're being changed for. These usually show what is called PITI, or Principle, Interest, Taxes and Insurance costs. It's also a good idea to just to help show you what your estimated monthly mortgage(payments) might be at the specified loan amount. If you have a good agent, ask him or her to work these numbers a bit further to give you an even closer estimate. And when I say close, I mean close. Good agents will call up the title company and other organizations associated with the lender to get actual costs and plug them into a refined GFE. And if you know the property you want, the agent can refine it still further by getting HoA charges or other fees that might be included with your monthly payments. This greatly helped me figure out how much house I could afford -- or in my case, condo.