First-time home buyers typically have a lot of questions about the buying process. This is understandable, given the size of the investment involved. This article answers five of the most common questions asked by first-time buyers.

1. How do I determine my price range?

Determining your price range should be one of the first steps you take. Once you know how much you can comfortably afford to pay each month, you’ll be able to narrow your house-hunting process to homes that fall within your budget. This will save you a lot of time and energy.

To determine your price range, sit down and compare your monthly income to your monthly expenses (savings, credit card payments, car payment, groceries, entertainment, etc.). How much is left over each month? Your monthly mortgage payment should be less than this amount. Now you can use an online mortgage calculator to break each sale price down to a monthly amount, and determine if that amount is inside or outside your comfort zone.

2. Do I need a real estate agent?

The short answer is yes. If you’re buying a first home, it’s a good idea to have a real estate agent. Buying a home is one of the biggest financial transactions you will ever make. So it makes sense to have professional help.

Your agent will help you find homes that match your price range and desired features. He or she will also help you validate the asking process (see below), prepare a purchase offer, negotiate with the seller, and navigate the rest of the home buying process.

3. How do I research the asking price?

First, you have to realize that it’s called an “asking price” for a reason. The price set by the seller is never set in stone. It’s what they are asking for, but it might not be the true market value of the home. Your real estate agent will help you validate the asking price by looking at comparable, recent sales in the area. This will tell you if the asking price is reasonable or too high, based on current marketing conditions.

4. Which type of mortgage loan should I choose?

First, do some research on the basic types of home loans — fixed rate, adjustable rate (ARM), FHA versus conventional, etc.

When researching the different mortgage types, pay attention to paragraphs that begin with: “This type of mortgage might be best for you if…” Generally, this type of statement is usually followed by a series of pros and cons that will explain the type of buyer who might choose that option.

As a general rule, if you’re going to be in the home for quite a while (five years or more), it’s probably best to choose a fixed-rate mortgage. On the other hand, if you think you’ll only be in the home for two or three years, you might want to choose an adjustable-rate mortgage to save money during your short period of ownership.

5. What happens at the real estate closing?

The real estate closing (also known as a “settlement”) is when property ownership transfers from seller to buyer. All remaining fees will be paid as well, and these are known as closing costs. The seller receives their portion of the payment, minus what they still owe on the mortgage. The deed of ownership is transferred to reflect the new owner.

As a home buyer, you would be wise to save more money than you think you’ll need at closing, just to be safe. You should also make sure you receive a HUD-1 statement (or “settlement statement”) at least one day prior to the closing date. This document gives you an itemized list of the costs you’ll be expected to pay at closing. The Real Estate Settlement Procedures Act (RESPA) requires that the escrow agent or lender provide this document at least one day before the closing.