There are many things to think about when considering buying a house. For instance:
- How much money do you have?
- What kind of house or property do you want to buy?
- What can you afford to buy?
- Should you buy a home or continue renting?
Though there are many decisions to make, buying a house doesn't have to be a grueling task. In fact it can be quite easy. Plus, it can be fun. You get to shop, you get to spend money, and ultimately you end up with not just a place to live but a home that is uniquely your own.
Most importantly you get to invoke change in your life.
Many of my clients have found that buying a home and moving to a new place has been a catalyst to an improved life experience. They often feel empowered that they are now in control and can change other elements of their life.
Having said that, here is what you need to know to help make buying a house an easy process.
MONEY MAKES THE REAL ESTATE WORLD GO ROUND
Before you can start shopping for a house, you have to determine what you can afford.
Since there are many factors that will weigh into how much home you can ultimately afford, here are some examples that will apply:
- Your monthly income (before taxes)
- Long-term debts
- Cash you can accumulate for a down payment and closing costs
INCOME Generally, you can afford a home equal in value to between two and three times your gross income.
Lenders usually say that housing expenses should not exceed 25 percent to 28 percent of your gross monthly income. The housing expenses include monthly mortgage principal, interest payments, property taxes and homeowner's insurance.
DEBT Lenders also take into consideration your regular monthly debts and obligations. Your housing expenses plus long-term debts should not be more than 33 percent to 36 percent of your gross monthly income
DOWN PAYMENT You usually should have money available to make a down payment and closing costs. Depending on your loan program the down payment can vary from 3 to 20 percent of the asking price for the house. Closing costs are about 3 percent to 6 percent of the loan amount.
DON'T FORGET THESE HIDDEN EXPENSES Make sure that when you calculate all your expenditures. You consider everything you spend money on. Including often overlooked costs such as:
Your Starbucks coffee every morning or afternoon
- Restaurant Meals
- Concert and Club tickets
- Sports activities
- Health club and other leisure activities
All these type of expenditures should factor into your calculations. Having an idea of what monthly mortgage payments you can afford will help you in determining the maximum loan amount you can borrow.
Author: Thomas J.Okon
Author Bio:
Thomas J. Okon is a Chicago Real Estate agent, who specializes in helping first time home buyers. He is an Accredited Buyer Representative(ABR) and author of HomeBuyingSimplified.com. A comprehensive website that explians in simple lanquage, how to complete all the steps of the home buying process.
