Hi all! I know it's been a while. I was in Atlanta last week in some pretty intense conferences and meetings. The best part was the meeting I had with my publisher. I have started writing a book "Nine things every First-Time Homebuyer should know." I realized after talking with just a few people at a time about buying homes--the majority being first time home buyers--that I could reach more people by writing this book. It's something I am quite excited about.

The home-buying process is daunting for anyone--regardless if it is your first time or not, and even though there is SO much information available at our fingertips--especially on the internet--it is sometimes hard to wade through it all.

With that said, I've talked with a number of first time homebuyers just in the last couple of weeks that were just getting started and had no idea where to start (confirmation for me to get this book written!) And while I always explain that the best place to start is to talk with a lender, I try explaining some things a first-time homebuyer may not know or understand yet.

When you rent a home or apartment, you know that your $1000 rent payment is RENT. Period. Sometimes you are lucky enough to have utilities included in that rent, some or all, or maybe the benefit of being a part of a complex that has a pool, tennis courts, and exercise rooms. You know before you start paying your rent what it will include.

The same should go for your house payment. When you talk to a lender to get qualified, and they tell you that the biggest payment you can afford is $1500, you need to know what goes in to that payment, and how that translates to how much house you can afford. Usually, if you put less than 20% for a down payment, your lender will require an "escrow" account to be set up. Part of your monthly payment will go in to that account each month and when your tax bill and insurance bill is due, the lender will ensure it is paid out of that escrow account.

When you talk with a lender and they say "you can afford a PITI of $1500 a month" this means that P=Principle; I=Interest; T=Taxes; I=Insurance. Your annual tax and insurance estimates are broken down in to 12 monthly portions which are added to your principle and interest payment.

SO, you ask, how do I figure out how much house the comes out to? Good question! You need to have an idea of how much the taxes and insurance are in your area where you live. Your Realtor can help you with this, or your lender. In Okaloosa County, Florida, we have the ability to go to the property appraiser's website, and find out what last year's tax bill was on any given property. Not all counties in the United States have that capability, though.

Interest rates and terms will also have an effect on your payment; allow me to illustrate on a loan for $175,000. The same home, this shows a fixed loan rate for 15 and 30 years, at both 6 and 7 percent interest rates, and the difference in total house payments. This is why it is important to talk with your lender. Interest rates change daily, and right now are under 6%, so that does affect what you can afford based on your personal circumstances.

Years	Interest Rate	Annual Tax	Annual Insurance	P&I	PITI (Monthly payment)
15	6%	$1,500.00	$1,500.00	$1,476.74	$1,726.74
15	7%	$1,500.00	$1,500.00	$1,572.94	$1,822.94
30	6%	$1,500.00	$1,500.00	$1,049.21	$1,299.21
30	7%	$1,500.00	$1,500.00	$1,164.27	$1,414.27

Tax and insurance rates depend on where you live. The only way to know how much insurance you will pay is to get insurance quotes for the house(s) you are interested in buying.

There is a lot to digest--and this should help explain where you are headed when buying a home!

Good Luck!