Thursday, August 14, 2014

Can I Afford to Buy a Home? Check Out This Simple Guide

Taking that first step to home ownership can be stressful.  Eliminate that stress with this simple guide

Step 1:  Get Pre-Approved

The only way to truly know how much home you can afford is to ask a lender.  Getting pre-approved lets you know how much you can afford before shopping for your home.

What to Know and Where to Find It

  • Income:  Stable income assures a lender you can make your monthly mortgage payment.  
  • Debt:  Add up auto payments, credit card payments, student loans, alimony, child support, and other.
  • Cash:  Total assets, amount in checking and savings accounts, and other investments.

Step 2:  Determine Monthly Mortgage Payment Including Escrow

Escrow is a third party account used to retain funds including the property owner's real estate taxes and hazard insurance premiums.

Step 3:  Understand Bills Associated with Home Ownership

Estimate that it will cost about one percent of the purchase price per year to maintain your home.  For a $200,000 home, you should budget approximately $2,000 per year or approximately $170 per month for maintenance.  Condominiums and co-ops will have regular maintenance fees.  You will also have utilities, gas, electric, water, sewage, cable, telephone, insurance, property tax, etc.

Step 4:  Compare the Total Costs to Your Monthly Salary

Subtract the total in Step 3 from your monthly gross income.

Step 5:  Test Those Numbers for Six Months
  • Set up a new bank account
  • Subtract your current monthly rent from your Step 2 total.
  • Deposit the difference in these numbers into the new bank account on the first day of each month.
  • After six months, determine how simple or straining the process turned out to be.
Step 6:  Establish Future Priorities and Plan for the Unexpected
  • What are your needs for your new home - furniture, lawn equipment, barbecue grill?
  • Is a new car in your near future
  • Do you plan to have children
  • How long can you survive if you lost your job?
This guide has been provided by Movement Mortgage and Jason Brooks. When you are ready to purchase be sure to contact Jason at 910-920-SAVE (7283) to finance your home.  Towering Pines Real Estate will be happy to help you search for the perfect home!  Call Allan at 910-528-1181 or Terry at 910-528-2078.

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