Financing a first home can be challenging. However, buyers who are prepared, and know what they can afford, can help expedite the process, saving themselves unnecessary headaches later. Before starting your home search, here are a few financial tips to consider.
First, figure out what you can afford to pay in a monthly house payment. This payment should take in to consideration, principle, interest, taxes, insurance, condo or home owner’s fees, and monthly assessments. Look at your monthly budget and track your cash flow, allowing no more than 28% of your gross income to go towards your new home payment. Keep in mind that a lending institution will normally qualify you higher than this figure. However, I have found that taking on a payment much higher than the 28% leads to financial issues down the road. There are several mortgage calculators available online that can help estimate what you can afford to purchase.
Pay down your debts. Credit card debt can limit how much you can borrow from a lender. Check your credit report thoroughly for any errors or unpaid accounts, and resolve those issues before moving ahead. Depending on what issues you run into, time may be needed to straighten out you credit.
Organize the documents required by a lender, especially those that validate income and taxes. Most lenders will require two recent pay stubs, two months of bank statements, W-2s, and two years of tax returns. Having these documents ahead of time will streamline and simplify the process when applying for financing.
The key to overcome the challenges of purchasing your first home is to follow our recommendations. Clean up your credit, ensure your finances are healthy, and make sure you have your financial documents collected before applying for financing. This will ensure stress free home buying experience.
When you are ready to purchase your new home, contact the Kahler Team at (605) 939-0508, or visit our website at http://www.thekahlerteam.com. Our dedicated team is here to provide counsel and assist you through the entire home buying process.
David Kahler
The Kahler Team
Email: david@thekahlerteam.com
Facebook:https://www.facebook.com/kahlerteam
Cell: (605) 484-8080
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