The money you pay each month to "keep a roof over your head" should be money that's invested in your future. If you own a home, then each mortgage payment you make is actually money you are saving. When you eventually sell that home you will have "saved" a certain number of dollars that are yours to do with what you will - invest in a larger home, buy a cabin, go on that long-planned vacation, etc. If you are renting you won't have that pride of ownership and feeling of stability and security.
As buying your home is probably the single biggest and best investment you'll ever make, you should begin well in advance to plan for its purchase.
The first thing you will need is a down payment, which is basically the amount of money you require upfront. The money you can come up with for a down payment, the lower your mortgage payments will be. Generally, you need a minimum of five percent of the purchase price for a home for a down payment (i.e. $10,000 for a $200,000 home).
Next come closings costs, which go toward finalizing the purchase - such as documentation, legal fees, etc. These add up to an additional two or three percent of the purchase price. If you can come up with the down payment and the closing costs (a good, frank discussion with your Realtor would be advisable now) you can now search out a loan for the rest of the home - your mortgage.
A general rule of thumb for determining how much of a mortgage you can qualify for is to take between 25 and 33 percent of your total monthly income; for example, if you make $4000 per month, you could possibly afford a monthly payment of between $1000 -$1350. The final amount you would definitely qualify for would be determined by your monthly bills, your credit rating, and other factors.
As most people are paid every two weeks, it might be wise to consider making biweekly mortgage payments. Twenty-six biweekly payments are the equivalent to 13 monthly payments. Since there are only 12 months in a year, biweekly payments are a simple way to shorten the time you will be paying off your mortgage. And, as your mortgage payments are made at the same time you are paid, you'll hardly notice the difference. You'll end up both reducing the term of your mortgage by several years and saving a large amount of money.
Unfortunately, many apartment renters feel they won't be able to get a mortgage. But with the comparatively low interest rates being offered today, and the heated competition between the various lending agencies, you may be surprised at what is available to you. Call a Realtor and investigate what opportunities may be out there for you now.
Remember, the more you know about the factors affecting real estate transactions, the wiser your purchase or sale will be.
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