Are you contemplating the purchase of a house, condo or coop?
Congratulations, you have timed it perfectly... because now is most likely the best time to make such a move... interest rates are at historic lows and inventory is still plentiful... it is pretty much the bottom of a buyers market... just compare today's 30-year fixed-rate average of between 3 to 4 percent to the 13 to 18 percent rates of the 1980's... enough said.
In addition, homes are now at their most affordable compared to just a few years ago... simply because home values adjusted to the new economic reality... and not to speak of the distressed properties offered at discounts.
With all these great deals around it's very easy to get carried away and to buy to much home... imagine, this is exactly what the millions of foreclosed home owners did not to long ago... with the slight difference that they paid way to much for their new diggs then... so, the lesson learned is to buy within your means. Just because you have been approved for a certain mortgage amount, it does not mean you should or need spend that much.
So, how much home can you really afford? Consider the following:
How much do you earn every month?
Whether you have a salaried job or you work on commission you just need to average out your pay stubs... consider also your lowest monthly income and how pay fluctuates from month to month. Do you have you a safety cushion of savings to equalize any of these ups and downs?
How high are your monthly debt payments?
Consider the monthly debt obligations you may have such as credit card payments, consumer loans, car loans, alimony payments, child support, and other debts that must be paid each and every month.
Do you have a stable job?
Unfortunately, today's job market is still a little bit shaky. While the unemployment rate has slighly improved, many still struggle to find jobs or are underemployed. Consider what would happen if you were to lose your job or you experience a pay reduction. Would you still be able to pay your mortgage and other obligations?
What are your average monthly expenses?
This is different than your monthly debt load. These are your normal average expenses including: utilities, maintenance, phones, gas, food, entertainment, cable, internet, clothes, travel, insurance payments, and so on. This number can vary quite a bit from month to month depending on what you do and when you do it. Again, averaging it out is the key here.
How long will you be staying in your new home?
As we all know, homes are currently just not appreciating in value as they used to... and nobody has a crystal ball to tell the future on this one either. But you probably will need to stay in that new home for at least five to six years before you would break even.
How much money have you saved?
In today's market lenders expect you to have at least 20 percent to put down in addition to closing costs... for conventional mortgages, that is. Just think, a $500,000 house will require a $100,000 down payment on your part. Do you have this money in addition to an emergency fund? If not, you might want to consider a less expensive house or you may want to wait til you have saved up some more.
Please call on me today if you are looking to make your home here in Westchester County NY...
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