Oh boy, this is a huge question!
I bought my first home two years ago... here's some of what I learned...
- Your monthly payment will be more than just your mortgage payment. Your mortgage is the amount you pay for your loan - often called the principal and interest (P&I). You also have to figure in property taxes (you should get an estimate for houses you're looking at, but you may have higher costs your first year, since you don't get a homestead exemption for the first year) and your insurance costs.
- Often the bank will ask you to include estimated pre-payments for your taxes and insurance with your mortgage. They hold the money in escrow, and then pay these on your behalf. But, you don't always HAVE to do this. I don't pay mine to the bank, I keep the money in a savings account, so I can get interest on it (and make sure it is paid properly).
- Make SURE you understand the terms of your loan. Is there a prepayment penalty (make sure the answer is no!), how long is the loan term, is there any way the rate may change. Also, if it's a special, non-standard loan (not sure if they're doing these anymore) there may be other restrictions, like you need to stay in the house for so many years before selling... or before refinancing...
- Many many banks will give you a home loan, then sell it within the first few months to a bigger bank. They generate the loans, but don't keep them, they make money by selling them. Don't be alarmed, it happens to nearly every one.
- Do you have a down payment? The best way to do it is to save up so you can put 20% down. It's a big chunk of money, but it lets you avoid PMI (private mortgage insurance, insurance for the bank if you get foreclosed on. No benefit to you, but extra cost per month.)
- You need to figure our your budget - how much can you put down (keep some in savings for emergencies) and how much can you comfortably pay from your monthly income. Then use an online calculator, look at different house prices/interest rates, and see what prices ranges get you near what you can afford.
- The shorter the loan, the lower the interest rate - a 15 year loan will have a lower interest rate than a 30 year loan. But, I chose a 30 year because a) it was stable over the long term, b) there was no penalty for prepaying, so i can actually pay it off in 15 years by paying extra each month, c) i like the flexibility - i make extra payments while i have a job, but if i have an emergency/lose my job, my "required" monthly payment is fairly low
- On a financial site I read, the gurus often recommend that (depending on your income tax bracket) you are better off putting extra money into a 401k rather than paying off your loan early. They claim that you will make more over time with the compound interest in the 401k than you will save on interest with the house. Just something to think about (I do a little of both - pay a little extra on the house, but not as much as I could - the extra goes to 401k).
- Find a mortgage broker that you really really trust. They're important in you getting a good rate (rates change DAILY, sometimes in the middle of the day), and in getting through closing.
- Be picky and find a great inspector to do your home inspection, look for someone with recommendations - they will be able to alert you to problems with the home, and help you avoid anything that needs costly repairs or is on the verge of falling apart, plus give you tips on how to keep the house up.
- Be aware of the extra costs of utilities for the home, over an apartment. In a house (versus condo), you'll have to factor in things like trash, sewer, and higher electric cost (to cool a bigger space). Make sure you have room in your budget for this!
Phew... that's just off the top of my head, from memory. Good luck, I hope you find something you love and that's within budget!