Ask the Expert

Q: I’m buying my first house. I am pretty sure I can spend $150,000 for my house because I did some calculations online. Problem is, lenders won’t give me a firm quote until I buy something. What gives?

A: Online calculators can be excellent tools, but remember there are many costs associated with buying a house. One of those is the tax rate in the area you buy. You won’t know that until you pick a property. You also will have to buy Private Mortgage Insurance if you put less than 20 percent down. PMI can change your monthly mortgage payment significantly.

No lender can give you an estimate until you have an address of the property you hope to buy. An address is required for the Loan Estimate, a three-page disclosure document.

Start your home search by getting pre-approved for a loan. Go to a lender and give basic information about your finances. The lender will pull a credit report and discuss your income and debt. You should have no more than 43 percent debt to income. Usually, 36 percent is preferred.

Once pre-approved you can get an agent and shop for your home. When you do find the property you want to buy, you can apply for a mortgage by going to different lenders and getting a Loan Estimate from each. The Loan Estimate, which has to be issued within three days after you apply, will give you detailed information about the loan, including the loan amount, interest rate, monthly payments and whether these can change.

The Loan Estimate will also tell you the amount of cash you need to close and the estimated costs to close.

It will list fees for things you can’t shop for (appraisals, for instance) and things you can shop for (pest inspection, for example).