As you enter the world of real estate, funding for your next home purchase stands on the forefront of the homebuying process. Understanding what you can afford may help you in starting your journey to find your next abode.
To figure out your finances to determine how much home you can afford, consider these factors:
If you’d like to use a system to manage your finances, consider utilizing the 28/36 rule. With this method, you dedicate no more than 28 percent of your gross monthly income to household expenses such as utilities and mortgage payments. Your debt shouldn’t take over 36 percent of your gross income.
Using this system helps you manage debts and financial duties, and demonstrates to mortgage lenders you can afford a monthly mortgage payment.
Before starting the home buying journey, it’s ideal to consider your overall standing to make sure you’re ready to purchase a home.
Consider your credit score - a higher credit score may spell approval from more lenders and lower interest rates. Do you have adequate cash reserved to afford a down payment, closing costs and other fees associated with buying a home? By answering these questions you’ll get a better idea if homeownership is feasible in the near future.
Purchasing a home takes effort and much consideration, so take your time during the process and figure out your finances to jumpstart your journey.
Angela is a San Pedro and Palos Verdes native, and is very familiar with the benefits of living in this wonderful coastal area of Southern California. As a key member of the family real estate business, Henry Falkenstein & Associates, she is able to service clients in San Pedro, Palos Verdes and the South Bay areas with ease. Whether you're a "first time" home buyer, a home seller or seasoned investor, she will ensure that you have all the necessary data and resources to make completely informed decisions about your real estate transactions. Her job as your Realtor isn't complete until you are 100% satisfied with her service!