Finding and purchasing a home that will meet your needs now and in the years to come is a significant and often stressful time. At Century 21 Major Realty our goal is to make this transition as smooth as possible. Here are some tips that you may follow to make the search of finding your dream home seamless.
Getting Started
Before you start looking for a home you should ask yourself a few questions:
- Where do you want to live? Do you want to be close to schools, shopping or work?
- What kind of house would you like (need)? Are you looking for a particular style? How many bedrooms and bathrooms do you want? Do you want a yard?
- How much house can you afford? Have you consulted a Realtor or mortgage lender to determine the size of the mortgage you would qualify for?
Here are a few tips to help you get organized:
- Pull a credit report on yourself and make sure the information is accurate. If you find any errors take steps to correct them immediately.
- Use the property search on my site. This will give you a good feel for the types of homes that are on the market and what they cost.
- Start saving money – you’ll need to have cash on hand for a down payment and closing costs.
- Don’t incur any additional debt. Pay down your credit cards – and don’t apply for any new ones. Don’t make any major purchases on credit – buy the furniture or car later.
- Contact me. I can help you determine how much you can afford, and provide you with information on homes that may interest you. I will also help you complete all of the necessary forms when it comes time to make an offer.
How much house can you afford?
Simply put, you can afford a house that costs as much as the largest monthly mortgage payment you qualify for.
A quick way to estimate the size of mortgage you qualify for is to take your gross monthly income (that’s before taxes and other deductions) and multiply it by .28. This works out to just over 1/4 of your gross income.
Mortgage companies use something called qualifying ratios to determine how much they will lend you. Most mortgage companies use either a 28/36 ratio or a 25/33 ratio. The first number in each pair is the percentage of your gross income that the lender would consider acceptable as a monthly mortgage payment (i.e. if you make $3,000 per month, 28% of that is $840 per month).
The second number in each pair is used when all debt payments are considered, not just the mortgage. (i.e. if you make $3,000 per month, but also have a $250 a month car payment, 36% of $3,000 is $1,080, minus the $250 car payment equals $830).
As you can see, in this example the numbers work out to be almost the same. Obviously if you have more debt you would qualify for less.
Note: The purpose of this information is to serve as a useful guide. For more exact, personalized information, please contact a certified mortgage representative.
Why you should work with a Realtor®
Working with a professional Realtor to buy your home is a good idea for several reasons:
- I will analyze your financial situation to help you determine how much you can afford.
- I am familiar with the process of buying a home and can explain things to you.
- I can easily access information on all properties listed for sale by Realtors in your area.
- I can set up appointments for you to see homes that interest you.
- I will help you complete all the necessary paperwork when it comes time to make an offer.
- I will help you arrange financing.
- I will be there at closing to answer your questions and make sure everything runs smooth.