If you are looking to buy a new home your first question is likely to be “what can I afford?” and given that we’ve all heard of horror stories about sub-prime mortgages and predatory lenders, we all want to be extra careful when it comes to borrowing.
How to know how much you can actually afford for buying a house?
It is not that hard, you really just want to spend the third of your income, your gross income that is. That’s before taxes on housing. But it is not just the mortgage you have to worry about. It is also insurance, the cost of maintenance and the cost of taxes. And that can be a very big bill at that awaits you at the end of the day, so you need to sit down and do the calculations to make sure you got the numbers right.
So after realizing that your numbers are fine and you have more than 20 percent your next step is putting that money down. This will put you in a great position as the house lenders will take you seriously they will give you the best terms, provided that you have a good credit score. So it makes sense to put down 20 percent but not more.
Why not put more than 20% down?
If you are buying a new house, maybe you are doing it for the first time, you’re going to find out that you actually have other costs that you didn’t expect. A lot of unexpected things can happen even in the first month, like the furnace going down or needing to repair the roof. So you really need to have some money on the side after you buy a new house, in case you want to repair or improve some parts of the kitchen, or any other area.
How to research the market?
You can do this online, and you will get the same results as if you would pay a real estate agent to do so. There you can choose your location and check the prices for yourself. To be more thorough you can check and compare the prices of the already sold realties with the ones that are just on the market to see the rate of climb in the price.
How do you find an area that fits your price and your needs?
Well, a lot of people have one area or neighborhood in mind before they decide to buy a house.
But if you don’t or if you are a little more flexible, you can search for a virtual map of that area online, and see are there services around. This means if there are grocery shops around or malls, or dry cleaning services. Basically, everything that you need to be in the vicinity of your home. Remember that one day you may want to sell this house and buyers will be more interested if they don’t have to walk or drive 6 miles to the closest grocery store.