Don’t break the bank before buying a house

Buying a house

Buying a house will be one of the biggest purchases, if not the biggest, purchase you will make. There is a lot that goes into buying a house, such as the type of house, location, and the number of bedrooms and bathrooms. The other side of buying a house is budgeting and making sure you can afford your home. One of the biggest mistakes that you can make is buying a house that overextends you financially, so here are some tips on how to make sure you can afford your next home!

Budget, budget, budget

The first step to creating a budget is finding out how much you can comfortably afford for your mortgage payment and the other monthly expenses that come with owning a home. Calculating your net worth will be the amount you can afford for a down payment. Now that you know how much you can afford for a down payment, you can then create a monthly budget. This part is important, so try to be as accurate as possible! Once you add up all your monthly expenses, subtract this from your monthly take-home income. This gives you an idea of the amount you can afford for a monthly payment.

Payments

Now that you have an idea of the amount you will be able to afford a down payment and monthly payments, it is time to visit your local mortgage broker! They will help you determine the size of your monthly mortgage payments and help you create a strategy that meets your specific goals and needs by looking at four key factors.

The size of your down payment will be a key factor in your monthly payments. If your down payment is smaller, your monthly payments will be larger. If the down payment is larger, the less interest you will pay over the term of your mortgage and monthly payments will be smaller.

The term of your down payment will also be a factor in how much your monthly payments will be. Is it a fixed rate or a variable rate, and how long will you be committed to that specific rate? With a fixed rate, you will be protected against the fluctuations because it is a set rate. With a variable rate, the mortgage payment will change, so it will be higher when rates go up and lower when they go down.

The amortization period and the payment schedule are the last two aspects for determining your monthly payments. The amortization period is the time it will take you to pay off your mortgage. Will you pay off your mortgage in 25, 30, or 35 years? And the last is the payment schedule; this can be bi-weekly, bi-weekly accelerated, or monthly which will also influence the amount you pay.

Five important factors

Lenders will look at five different aspects that will help determine if you qualify for a mortgage loan. They will look at your total income to make sure that you can comfortably afford to buy a home, and they will check to see if you have a steady employment. Lenders will also look at your debts, such as credit card payments and loan payments, as well as credit history and the value of the property you are looking to buy.

It is best to get a pre-approved mortgage before you start looking at houses so that you are confident that there is financing available to you. At the end of the day, don’t forget your budget because often people will qualify for more than they expected, and you don’t want to over-extend yourself financially! Clinton Wilkins Mortgage Team can help you find the right sized mortgage for you.

If you are thinking of buying a home, stop by your local mortgage broker’s office and discuss a strategy that will meet your specific needs. Contact Clinton Wilkins Mortgage Team and we will help you create a game plan so that you can make the best decision about your next big purchase.