Good news for people who are looking to buy a home this year. The interest rates on mortgages stayed in the 4.5 percent range for most of the last year. The housing market has rebounded strongly, but the costs of housing are still reasonable in most areas and the rates are expected to be positive for the rest of the year. Here are 8 things to consider if you are buying a house this year or in early 2017.

1. Prepare a Down Payment of at Least 3%

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Preparing for buying a home is very important. The first way you should prepare is by saving money for a down payment. You will also need to have money for a home inspection and potentially for some closing costs. How much of a down payment do you need? In the past, consumers aimed for 20%. However, times have changed. Lenders routinely expect homebuyers to have a down payment of about 3%. The Federal Housing Administration (FHA) wants buyers to have a 3.5% down payment. Those of you who can save more would be advised to do so, because it will give you a potentially lower monthly payment.

2. Get Preapproved

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Before you start looking at houses, get preapproved by a lender. This will ensure that you are pre-qualified, meaning you will know the maximum you can spend on a house. This saves you time since you only look at properties that are in the range of what you are approved to borrow. RocketMortgage and other lenders have websites than can get you approved efficiently.

3. Understand Loan Types

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There are many different types of home loans and this can be confusing. Have a good understanding of the loan types before you sit down with a lender. Fixed-rate mortgages are typically the preferred financial vehicle, but that doesn’t mean it is right for every situation. Adjustable-rate mortgages have both benefits and drawbacks. Those of you who plan to stay in a property for at least 20 years probably benefit from a fixed-rate mortgage, while those who plan to move or flip the property within 2-5 years could consider variable-rate mortgages. Review the basics online first and then meet with lenders.

4. Compare Lenders

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When it comes to buying a home, do not feel pressured to pick just one lender right away. The internet has many websites that let you compare lenders and their fees and interest rates. It’s also a good idea to speak to a mortgage specialist at your own bank, particularly if you have had a long-term good relationship with a history of on-time payments. The local bank may want your business.

5. Consider the Neighborhood

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When looking at homes, try to zero in on a neighborhood that works best for your family. Factors like the length of your commute, the school system, crime rate and walk score are all important indicators of what will be the best fit. Consider the proximity to shopping and recreation areas and don’t venture too far beyond where you are comfortable.

6. Budget

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If you don’t have a monthly budget, make one before you sign on the dotted line. Plug in the different mortgage payments to see how it would impact your overall monthly bills. Once you do this, it will be easier to resist real estate agents who push you toward buying the maximum house you can get approved for. Remember, you don’t want to be “house poor” having to cut other expenses just to make your mortgage payment.

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