Disclosure: This is a sponsored post. All opinions stated are genuine and my own.
If you're looking for a house, make sure you stay within the boundaries of what you can afford. It can be so tempting to look at houses 'just outside of your income zone' and convince yourself you'll be able to find a way to make it work. And that is all well and good, if you can, but what if you can't? Nothing ruins the exhiliration of owning a home faster than struggling to make the payments on it.
There are some things you can do to help.
1. Use a mortgage calculator. Be prepared before you even start to search. Plug in the numbers and see what you truly can afford. The best mortgage calculator will take into consideration not only things like your income and homeownership responsibilities (like taxes, insurance and potential HOA fees) but it will also consider things like your current debt-to-income ratio and how much money you are actually shelling out on expenses (like credit cards, student loans, etc.). A high quality mortgage calculator can also provide other information and facts you might not have considered when it comes to understanding where and how you are spending your money. When you have that clarity, you also have the ability to make changes that will help you be in a better position to buy.
2. Know before you go. This is closely related to number one, but a little different. It means have a clear number in mind for what you can afford to pay, and do not rely on just the amount you were approved for on a pre-approval letter. While it seems like you wouldn't receive an offer from a bank that you cannot truly afford, that is not always the case. What you may be approved for may not always be what is comfortable to pay. After you have used the mortgage calculator, and plugged in the relevant information, you will have a good idea of what your payments will be. Is it a number you can ease into without hesitation? Or is it giving you pause. If the hypothetical numbers are making you stop and think, they are probably too high. That is when you will need to readjust your thinking and aim for an amount that leaves you shaking your head up and down and saying, "Yes! I can afford that amount!
3. To Negotiate or Not to Negotiate? After you have determined the amount of money you can spend on a house that won't leave you reeling, do yourself a favor and do not look outside or just above that amount, unless you have supreme negotiating skills to help you get the price of the house down to where you need it. In today's market, that is not as easy to do as it once was... the demand for houses, among other factors, has caused the price of homes to rise exponentially and lowered the possibility for you to haggle or 'find a good deal.' Surely there are deals out there, but finding them is no longer an easy thing to do. Stay within your means.
4. Put yourself in the best position to buy. Pay off old debt, get your credit card amounts paid down and ensure monthly expenditures are only necessities. It is not the time to buy a new car, or get prepared for a new home by financing new furniture. Save those things for after you have settled into your new home (if you find at that time that you can afford them). Why? Because you will want your current financial record to prove you a solid candidate to the mortgage companies. They will be carfefully scrutinizing them to determine your financial health.
5. Shop around. If you have a pre-approved offer from someone and you feel you can get a better interest rate or deal, by all means, shop around. You want to be careful because too many credit checks against you are not favorable, but you also do not want to pigeon-hole yourself into a rate you could have beat with a little research. Likewise, while you may have found a home you love, there are a lot of houses out there. It might not hurt to continue the search a little longer. You could find a house you want just as much, for a better price. Buying a home is one of the biggest financial decisions you will make in your life, if not the biggest. It is important to be careful how you make it.
The process of buying an affordable home can seem overwhelming, but like anything else, there are ways to make it easier. Having the best information is key, so do your homework, consult people and agencies you trust, and go in with your eyes wide open. Keep your goal in mind to buy only a house you can afford, but to also do so at the best rate you can get. Your future self with thank you for your efforts.
When this bubble pops things will change. It will be a buyers market not the sellers market is is now. That's what you need to be waiting for.ReplyDelete
Have a fabulous day, my friend. ♥
These are great tips for buying a home. I find the mortgage calculator to be extremely helpful. Thanks for sharing!ReplyDelete
This is a great tool to help you determine your mortgage payment capacity. It can even help you gain savings.ReplyDelete
Another piece of advice I would give is to live a little below your means! If you get approved for, say, $300k try to limit yourself to a house that is slightly less expensive. Most people can't do this- they want to go for the largest, most expensive home they can get and it drains their monthly cash flow, leaving little money for anything else.ReplyDelete
We bought new house 6 months ago. I guess we were pretty lucky, because house is really nice and our offer was first one. But now we still need to fix many things inside.ReplyDelete
These are important tips for people looking to buy a home. The mortgage calculator was really vital when we were buying!ReplyDelete
We are looking into buying another house in the spring! This is a helpful tool!ReplyDelete
Such wonderful things to keep in mind when buying a home. Thanks for sharing this.ReplyDelete
Great advice. I have plans to buy house and lot early next year. This is very helpful for my research.ReplyDelete
These tips are great! We recently bought an apartment and knowing our financial possibilities was the key. We were able to negotiate a really good deal on the parking space, saved us approx. $15k! I listened to negotiating lessons to sharpen my skills, before going to the meeting. :)ReplyDelete
These are indeed great tips for someone buying a home. Just like you said a mortgage calculator was a must and I did negotiate a lot after doing my research to get a good deal.ReplyDelete