A house is one of the biggest purchases that you will likely make in your entire life. This is why it is absolutely necessary to find the right house for you not only in terms of specifications, but also in budget. Purchasing a home isn’t as easy as swiping your credit card or signing a few papers. You have to understand the factors at play such as your monthly income, your expenses, your credit score, the down payment terms, current interest rates and available financing schemes. With so many elements involved, it can get confusing to know just exactly how much home can you really afford.
Why should you know this ahead of time? Home buyers, especially first time buyers, can waste so much time looking at houses that are too expensive. On the other side of the spectrum, some buyers also limit themselves for fear of finding something that is potentially unaffordable.
Calculating how much you can afford to pay and how likely it is that you will be approved for a loan can give you an idea of your upper limit in terms of monthly payments. As complicated as it may sound, a quick rule of thumb is: multiply your annual household income by three. This gives you a figure close to the price of the home you can afford. For those who have minimal debt payments and have the ability to pay a 20% down payment, increase the multiplier to 4 instead of 3.
For example, if you and your spouse make a total of $70,000 per year, then you can most likely afford a home that costs $210,000. If you have saved enough for a 20% down payment, then you may be able to afford a house around the $280,000 price range.
Many home buyers are faced with the question of whether they should take the leap of buying a house or if they should stick to renting. Both options offer different advantages and disadvantages. You want to determine which option is more affordable and makes more sense for you.
Depending on your priorities, buying a home and renting can have different advantages that might suit your needs better. However, in terms of finances, purchasing a home makes better sense since the monthly cost of rent is most of the time close to or comparable to the monthly amortization. Tax advantages of purchasing a home also brings the monthly payments lower, making it less costly than paying rent.
Knowing your credit score is an important component of determining how much you can afford. Your credit score directly affects the interest rate your mortgage will likely have. The higher the interest rate, the larger the amount you will have to pay every month on your housing loan.
The three credit reporting agencies where you can request a copy of your credit score are Experian, Equifax and Transunion. Most likely the banks will use the middle score in your application since these three agencies will give different numbers.
Credit scores range from 340 to 850, and the higher your score is, the lower the interest rates and the bigger range of financing options are open to you. Banks use your credit score as a way to track your credibility as a borrower. The factors that will affect your credit score are as follows:
Every state has its own home buying program that helps buyers acquire the house of their dreams. These can include housing counseling agencies, seminars on predatory lending, assistance programs, home ownership vouchers, assistance in home repairs, foreclosure avoidance and making the home more energy efficient. These programs vary from state to state so it’s best to check with your local government to see what’s available in your area and how these programs can benefit you in your quest to purchase a new house.
Buying a home cannot be done in a whim. It takes careful planning and research to get a mortgage that fits your family’s needs and budget. Before closing that sale be sure to double check what you can really afford and the financing options that are available to you. Are you trying to determine whether you can afford to buy a house? Tell us about your experience.Continue to read
When you dream about having your own home, it usually starts out with the dream of having enough money to buy what you want. Saving for the future includes saving for your own house. Once you have enough money to buy the house, do you think that is enough for you to finally say that you are really ready to purchase a new house? Are you ready to be a new home buyer? Having enough money, although it is the primary requirement, is not the only thing you should consider when you are looking to buy or build a home. So, as a new home buyer how will you know that you are ready? What are the determining factors?
As mentioned above, the primary thing you need to worry about as a new home buyer is the financial capability to do so. You need to have money on hand to pay off the upfront costs (down payment, taxes etc.) and reliable resources for the regular monthly mortgage payments after.
Another important thing you should consider before finally investing in a house is the suitability of the house in terms of your personal needs and preferences. A few of the important things to consider when searching for a house are:
To get a good mortgage deal, you need to have a good credit score. If your credit score is not good then you might want to consider improving your score first before buying a property.
Although, no one can really give a 100% accurate prediction on when prices will go up or down, it is still advisable for you to wait it out if real estate prices are at an all-time high. For sure, prices will eventually go down, therefore, it might be best to wait until the market prices come down.
How long you intend to stay in the new house is important. The high upfront costs will not be compensated if you intend to stay in the same house for less than 3 years. If you are fully committed to stay in the same house for many years, then that decision adds up to your readiness to purchase the house.
To be better ready and to avoid future financial burdens that are hard to fulfill, compare different types of mortgages to see which one offers the best deal for your particular situation. If you do not have a mortgage package in mind that you think will work best for you then you need to look for the one that will be affordable for you in the long run before you can truly be ready to buy the property you want.
Your responsibilities as a homeowner begin when you purchase your home, and you need to be sure that you are ready to handle all the responsibilities of actually living in a place of your own. You have to be committed to providing the regular maintenance that your house need. You can no longer rely on a landlord to come and fix things.
Being ready to buy a new house is about more than simply having the money. It is a long term commitment. If you really want to purchase a particular property, just remember to review all of these things to see if you are truly ready. So are you truly ready to buy a new house? Are you ready to be a new home buyer? Did you consider all aspects before finally deciding?Continue to read
We all want to get the best value for our dollar, and since we are looking to buy a house, it’s always best to save up as much money as we possibly can. Indeed, because of the high value of real estate properties, there are a lot of areas where we can save during the home buying process. Below are some of the smart ways you can keep your dollars in your pocket book when looking to buy a house.
You’ve probably already heard of a mortgage calculator, but do you know the benefits they offer? First of all, they can help you get an idea of just how much you can afford to spend on a house. This seems like the obvious function, but there is more. Because you can change different values like the mortgage term and interest rate, you can quickly calculate just how much you’ll be saving if you decide to take on a lower interest rate or a shorter term. And when you have the mortgage, you can also experiment with advance payments and check your savings using the calculator.
Mortgage calculators allow you to get the information you need with just a few clicks. This knowledge can help you make smarter decisions because you can really see the amount of savings that you stand to gain rather than just imagining it in your head.
Yes, you’ve probably heard this a thousand times before, but there really is great value to be found in buying foreclosed homes.
According to ABC news, foreclosed homes are 28% cheaper than other resales. If you don’t feel comfortable buying a foreclosure in an auction, you can opt to scout around for those which have been bought back by the bank. This process is generally easier and sometimes the selling bank can also offer you a mortgage.Skip the AgentBroker’s fees are usually paid by the seller, but by skipping the real estate broker, you can have more leverage in negotiations. Since you are the direct buyer, it is a given that the homeowner has already saved an average of 6% in brokers fees. If you can get the homeowner to waive the 6% in his selling price as your discount, then you will have immediately saved a lot.
Just bear in mind however that it can be more difficult to find a house you really want without getting an agent to help. You have to be more diligent with your research, and never underestimate the power of your network. Try to ask your friends and relatives if they have friends or co workers who are selling their home. You never know when or where you’ll find a lead.
Ever watched the reality TV show “The Apprentice”? If you’re a fan of the series then you may have already picked up on some valuable negotiation tips. Don’t be shy to ask for a discount, and if the owner doesn’t give you a price reduction right away, don’t lose hope. Work with the seller and ask him what arrangement works best for the both of you. You can try offering a higher down payment in exchange for a lower total cost.
Most of us are concerned about the total contract price, and rightly so. However, if you can’t find any more ways to tweak the selling price, then don’t forget that you can still save on the small details. This includes checking the condition of the home for potential repairs. If there is a leaky pipe or a broker door knob, then ask the seller to have it fixed first. Or if it’s a big repair, request for a discount so as to cover your potential expenses.
Don’t Waste Your Money
Make sure you don’t waste your money, take your own lunch to work or even grab some instant coffee to have on your desk. Many Australia’s spend thousands a year on unnecessary things. Another thing is to prevent betting during the Spring Carnival, even a few small bets can make a difference. To prevent this you can find bonus free bet offers via this link to have a bet or two during this period without risking a cent.
These are only some of the ways you can save on buying your dream home. If you want to get the best deal, you can also choose to befriend top brokers and agents who know which properties are selling cheaper than the market price. No matter what you do, do not rush into buying a property and always take the time to inspect.
What other ways can you think of to save money when looking to buy a house? If you have bought a home what are some of the ways that you saved money during the process?Continue to read
We all want to get the best value for our dollar, and…
When you dream about having your own home, it usually starts out…
A house is one of the biggest purchases that you will likely…