(MotivateDaily.com) – Are you on the market for a new home? If so, there’s a lot to consider. Down payment, financing, location and the perfect neighborhood are a few things to think about. But how much home can you really afford? Your lender gives you a dollar amount, but that’s often based on your income and credit report information. There are other factors you need to consider too. Keep these in mind moving forward.
Tackle Your Debt First
One of the first things your lender does before approving your mortgage is to run a credit check and look at your FICO score. Even though your number may be reasonably high because of your debt-to-income ratio or because you and your partner don’t have any mutual debt, your credit load can still be hefty. Being tied down to high credit card payments can make it hard to pay your mortgage each month.
Have Extra Money in Savings
Getting a home you can afford means always being prepared to make your house payment. Financial setbacks, an unexpected job loss or sudden emergency can easily eat away at your next paycheck.
If you don’t have money set aside in savings, your next check that was supposed to go toward your mortgage is wiped out. Have a significant nest egg set aside for emergencies before you buy. This will make it easier to pay your mortgage in a pinch.
Find the Best Financing
If you google how to get a mortgage, several lenders and brokers will pop up. Start with someone you trust. Do you bank locally? Try them first. You’ve already established a financial relationship with them.
Your mortgage broker will guide you through the pre-approval process and get you the best loan terms possible. You’ll want a mortgage with a low-interest rate, so payments will be affordable for the long term.
Consider the Location
Is the neighborhood you’re looking at one of the nicer ones in town? Location has everything to do with how much home you can afford. You can get the same home for considerably less if you’re in the right neighborhood.
Demographics and cost of living are everything. Use a buyer’s real estate agent so they will find you a home in your price range that will fit your needs.
Extra Fees or Maintenance
Before you sign on the dotted line, take into consideration any extra maintenance or hidden fees involved:
- Is the roof new, or will it need to be replaced in a few years?
- How big is the yard? Will you have to hire a lawn care service?
- Are there any HOA fees or other property assessments that can make it more challenging to pay your house payment?
Issues like poor insulation or an electric heating system can also generate added costs and make it hard to stay on budget as you make your mortgage payment each month.
Getting into the right home is more than just getting the size and location you want. It’s about being able to pay the house payment and the maintenance that goes with it. Your home is your biggest investment. Make sure what you put into it will boost its value for years to come.
~Here’s to Your Success!
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