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One problem plaguing excited first time home buyers is the deposit for the house of their dreams. If you are one of them, this problem can be resolved with a little help from family or friends or the First Time Homebuyer Credit. But all these are just the beginning of your new life as a homeowner and your responsibilities is just starting.

Most first time home buyers are young newly-weds struggling with their budget but they are keen to get their own house instead of renting an apartment for years. The money that would go to the rent would instead go to the mortgage. This is a smart decision, but there are a lot of things you should know to get yourself the best mortgage deal and save you hundreds of dollars in the long haul.

Calculate how much you can comfortably afford to spend on your mortgage each month. Deduct your down payment from the amount of the purchase price of the home and determine whether the payments on the home you are considering will be manageable. You need to set a strict limit and stick to it, no matter how tempting it may be to spend more. Tell your realtor your top price and advise him you don’t want to look at homes that cost more. Realtors make money on commissions and the more expensive the house they sell, the high their commission. Don’t let your realtor talk you into a house you can’t afford.

Young newly-weds are always excited at the prospect of owning a house that they jump into a deal without examining what goes with the mortgage. They take the first offer that looks good on paper without knowing that there are fees and more fees attached to the deal.

Take a look at the required deposit and the disadvantages of having insufficient funds for the deposit. If you do not have the amount, the lender will slap on the insurance fee on the mortgage, increasing the mortgage amount by as much as $20,000. A no deposit mortgage may be tempting for professionals who can service the mortgage but cannot save for a deposit. Take note that these no-deposit loans have more requirements and there are still the standard fees to pay.

Closing costs include the points that buyers and sellers pay on the mortgage, the cost of title searches and home inspections and any unpaid property taxes. If the home requires repairs, the lender may also require that either the buyer or seller put money in an escrow account to cover the costs. Putting an offer in on a home doesn’t insure the sale will go through. Your lender may find a problem with the home and refuse the loan. You can try again with another lender if the problem isn’t too serious.

So how do you compare lenders? Check out the APR or Annual Percentage Rate which will reflect the total cost of the loan and calculate the Annual Percentage Yield which will show how the compounding interest makes the loan worth the trouble. Ask the lender to disclose both APR and APY. They are bound by law to give this information.

With the mortgage information you need tucked under your belt, you can negotiate for a reasonable and affordable loan and keep your house for years. A dream house may not be for you, but you can make that house your dream house, one that is for keeps.

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