It may sound cut and dry, but it's really not a one size fits all situation. If you’re going to start the home buying process, you should start by getting a grasp on your budget. Here are some things to think about that will help guide you:
Current Spending Habits
This is important! List your current expenses to come up with a monthly total. Be sure to include everything from cable/internet to gas and groceries. Don’t forget entertainment costs as well! This will help determine how much you can afford as a monthly payment for your mortgage.
Other Costs in Your Mortgage
Your monthly mortgage amount is composed of more than just the amount borrowed (purchase price – down payment). Your mortgage is comprised of your principal (amount borrowed) plus interest, tax and insurance.
Don’t Forget Your Debt
Once you talk to a lender about getting preapproved, you’ll hear them mention your debt to income ratio. This is where all of your debt gets examined and factored into an equation that determines how much of a loan you will qualify for. Credit cards, student loans and car payments are all examples of debts that will be taken into consideration.
Closing Costs, etc…
Ask your lender for estimated closing costs so you can factor this into how much you are able put down as a down payment. You’ll also want to consider the cost of legal fees, home inspections and any other home buying related expenses.
Now that you’ve done your homework, talk to your local real estate agent about your budget and start looking at some houses! If we can help you get started, give us a call at 617-974-9275.