Is It Time to Buy? Can You Afford a New Home?
Buying a home is a big decision. The questions you'll need to ask are:
-Should I buy?
-Can I afford to buy?
-What can I afford?
-What costs should I expect?
-Can I afford to buy?
-What can I afford?
-What costs should I expect?
Should I Buy a Home?
- Do you have a lot of debt or is your income likely to drop in the near future?
- Would you need an adjustable-rate mortgage (ARM)?
- Are you planning to move within 5 years?
- Is the market declining?
If you answered "no" to all of those, then YES, you probably should buy a home!- Would you need an adjustable-rate mortgage (ARM)?
- Are you planning to move within 5 years?
- Is the market declining?
Can I Afford to Buy a Home?
First, think about a down payment. If you're selling a house, see how much equity you have. If not, you'll need to come up with some cash. First timers should look into government programs and FHA or VA loans.Now, list your monthly expenses except your rent or mortgage. Add incidentals such as gas, groceries, eating out and auto maintenance.
Take what's left and add it to your current rent/mortgage payment. That's what you can afford without changing your lifestyle. Now deduct some so every home repair doesn't send you into debt. Keep in mind you may need to cut expenses to afford the home you want.
How Much Home Can I Afford?
Under ideal conditions, payment on a 30-year $280,000 mortgage would likely run you about $1,700 a month. A typical $135,000 mortgage would be somewhere around $800. A high debt-to-income ratio, however, would raise your payment. A realtor or online mortgage calculator can help you figure out where you stand.What Other Costs Can I Expect?
-Earnest money accompanies your offer to show the seller you're serious. Usually, becomes part of your down payment, is refunded if the seller ends the deal, or forfeited if you end it.
-Home inspection determines whether the home is safe and structurally sound and its problems or potential problems.
-Lender fees for credit reports and appraisals may need to be made up front.
-Closing costs are typically 2.5 to 3% of the loan amount.
-Mortgage insurance, if you put down less than 20% of the purchase price. You'll also need homeowners insurance.
-Home inspection determines whether the home is safe and structurally sound and its problems or potential problems.
-Lender fees for credit reports and appraisals may need to be made up front.
-Closing costs are typically 2.5 to 3% of the loan amount.
-Mortgage insurance, if you put down less than 20% of the purchase price. You'll also need homeowners insurance.
Begin Your Home Search
Now that your eyes are open to the financial realities of real estate, go find your home! Search Property for Sale at PlanOpen.
