Considerations When Buying a Home - By: IC

So you are ready to buy a home? Do you know how much house can you afford? What kind of home are you looking for and where do you want to live. Do you have children? If so are there schools and parks? Let’s find the answers to these questions and embark on this thrilling but stressful search.

First you may want to talk to a loan office or a mortgage broker. Find a local lender, ask around and find a mortgage professional with good reviews and considerable experience. Find someone with several programs and familiar with Florida’s specific programs.

It is best to err on the conservative side of your budget when determining how much house you can afford.

Rule of thumb is a home that costs up to 2 and one half times your yearly gross income. Your buying power will depend on how much available money you have for a down payment and how much the lender will loan you. The larger the down payment the lower the cost of your home will be.

There are closing costs which typically total between 3 to 6% of the loan and include points, fees and inspections. The lender might want you to have at least a couple months of mortgage payments in savings. There will probably be a need for miscellaneous costs for example: moving, repairs, and furnishings. How much you can afford in monthly payments will be determined by your income and existing debt.

Do you have an existing home? If you still have this home can you afford (2) homes? You may consider a new home purchase contingent upon selling your existing home. If you have a lease when does that expire? You may be able to negotiate a termination of the lease. You may want to use a real estate broker to determine how much homes sell for in your area. Factor in the real estate’s commission and find out what the broker will do to market your home.

There are (2) ratios which serve as guidelines: Housing Expenses-This is your monthly mortgage payment along with property taxes and insurance and cannot exceed 28% of your monthly gross income. The second ratio is debt to income ration which should not exceed 36% of monthly gross income. These guidelines are somewhat flexible.

What kind of home do you want; new or existing? How many bedrooms and bathrooms do you want? Do you want some land etc? When you research the area you want to live in; check out property taxes and homeowner insurance. What is the crime rate, mileage to work, are there stores in close proximity? Are there restrictions on the property that is; liens, zoning issues or easements?

This information may have been helpful in determining how much home you can afford. You know what costs to expect and how much money to save. You have done the research and know where you want to live and what kind of home you want; existing or new construction.

About the Author

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