Buying a home can be extremely exciting as well as one of biggest
financial transaction of many peoples' lives. It is extremely important
that potential new home buyers are well educated and well informed
before buying a new home. New home buyers should start by getting
pre-approved to focus on the financials of a purchase before starting to
look at homes, where emotions can override a smart financial decision.
A great way to get started in purchasing a new home is to have a
detailed expense breakdown to help you analyze whether or not you can
afford to buy a new home. Homeownership comes with a lot of expenses and
going over your budget in terms of how much you make and spend each
month is critical. How much money you will need to purchase a home will
depend on how much the cost of the home is, what type of loan you get
and how much down payment you will put down.
Your Debt-to-income ratio is the figure that lenders use to see what
kind of mortgage payment for which you can qualify. Debt-to-income ratio
standards vary based on the loan program but most lenders put weight to
your credit score and history. The debt included here will be your
revolving required debt such as a car payment, student loan payment and
credit card required payments. Things like cell phone bills, rent or
utilities are not typically included in these figures. Please note that
what you qualify for may not be the mortgage payment you are
comfortable making but in other cases, your maximum approval could be a
lower payment than your rent in your area and you may have to spend
close to your max to get anything in your desired area.
We realize that sometimes when purchasing a new home we can invest
every cent we have on the new purchase but it is a good idea to put
aside some emergency cash for a rainy day. With a new home purchase it
can be best to expect the unexpected, so having some extra cash saved up
after purchase can help you with any unforeseeable emergency. You lose
the ability to call your landlord!
After you have your budget and your pre-approval, it is always wise
to have a lender work up two scenarios for you for 2 different price
points so when you are looking at houses, you can see the difference
between a, for example, $450K and a $500K purchase on paper to help you
make a decision on what houses to look at. Obviously a $500,000 home
will likely have more appeal than a $450,000 so to reign in your
spending, it's best to start your search lower and gradually go up in
price if you aren't finding homes you like.
Going forward, your agent can set up an automatic
search for you, targeting your wants and needs with a price point and
you can begin your search!
Author:Brooke Willmes Phone: 267-980-5858 Dated: April 28th 2014 Views: 1,915 About Brooke: I have 14 years’ experience in residential and commercial properties throughout the Philadelphia a...
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