There are many considerations when shopping for a new home, one of the most important being price and subsequently, the home loan. Home loans are based on several factors including, but are not limited to, your income, debt and funds you have available for a down payment and closing costs.
It is important to ensure you are comfortable with your total monthly payment, including principle and interest, taxes, home owner’s association dues, homeowner’s insurance and mortgage insurance if applicable. You’ll want to consider your lifestyle and the way you typically spend your money. Another factor is any debt you have and payments you are required to make each month. In addition, taking a look at your long-term savings goals is also an important factor to keep in mind.
A good guideline is to keep your total housing expenses under 36% of your total income. This recommendation can vary depending on housing costs and the property location. There are many home affordability calculators available for use online. While these are a good starting point for reference, sitting down with an experienced loan officer who can consider your individual situation and will help put you in the best position to purchase a home.
According to Paul Girard, loan officer at Evergreen Home Loans, it is important to do a thorough analysis of your finances, debt and goals before deciding on a price range for your perspective home. After all, purchasing a home is one of the biggest financial decisions of your life and can set you up for financial success long-term.
The first step to a successful home buying journey is speaking with a trusted mortgage advisor and becoming pre-approved*. Pre-approval will not only help you and your real estate agent look for homes in an appropriate price range, but also assist you in planning a budget for your new financial situation. This way, you can shop with confidence and know you will be able to afford the payments on your new home comfortably.
With the guidance of a knowledgeable loan officer and help from your real estate professional, you could be on the way to owning your dream home and setting yourself up for longstanding financial stability.