I want that big house. But how much of a mortgage can I truly afford?
Thanks Jeff for an excellent post for Buyers to consider. Just b/c one wants it doesn't mean it is a good thing to tie yourself down too. I work with a lot of first time home buyers and we always have the 'Talk' about wants and needs.
As always it is fun to share what my peers are passionate about- If you are a new buyer in SW Missouri and would like to work with an Agent that will help you figure out how to purchase the next roof over your head, plz give me a call!
I can help you get the house, it is up to you to make it a home!- be good Cheryl(417-366-0057)Willis
Re/Max Solutions
It’s very easy to assume and or want something without always thinking it through. Emotions can play a role in your decision when purchasing a new home. But are you always asked the right questions or led down the right path?
How much of a mortgage can I have now is a question often asked. But what about what you can personally afford, without strapping yourself financially on a monthly basis. Many focus on the interest rate or how much of a house they can afford and lose site of their basic goals.
When a loan officer starts asking the borrower a question, in my opinion, the first thing that should be asked of that borrower is how much of a mortgage payment can they afford and not based on their income. Secondly, the loan officer should be asking about the buyers goals also. This is also true for someone refinancing their mortgage.
So what should you do first? Before you even look at houses or even speak to a loan officer, you should go over your finances, making some sort of budget. Again, defining your monthly mortgage payment is the most important part when buying a home. This mortgage payment is to include your principal interest payment, your property taxes, and your homeowners insurance. If you are buying a townhouse or a condo to where there are association dues or even a single family home that is a PUD, you need to add this monthly expense into your budget.
Defining your budget to include your short term and long term goals. Things that should be thought of :
- Having children or have children. If so, school expenses, clothing, and food.
- How old is your car(s). Do you plan on buying a new car soon?
- How are your spending habits when you have money. Do you like to shop often?
- Do you like to travel?
- Do you have to take care of your parents or could this take place in the near future?
Assets are extremely important also. Will you have money left over after closing? Will the house need some initial repairs upfront after moving in? Will you need a new roof in two years? You should always think about setting up a housing account to where you always have two months of mortgage payments in that account. Plus having an additional $1,000 in your account for housing emergencies. If you say, hey Jeff, I can barely get enough money now to buy a home. Well, maybe you should save for six more months until this is possible. My point, just be pro-active and not sweating things later on when something unexpected does happen.
Credit and credit scores – How is your credit? Does it need work? I still see many trying to buy a new home before their credit has been viewed and or fixed. Many lenders require credit scores of 640 or above. We can still do them down to 620, but it can be a case-by-case scenario at times. – Truly understand your credit scores -
Summary : It’s just natural for a buyer to want to know the maximum mortgage amount or the price of the home that they could qualify for based on their total income. Keeping up with the Joneses sometimes got people in trouble. Worry about what you can afford and not what you can be approved for. Understand your finances, your long and short times goals, and have a budget. Good luck…
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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc
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