TOOLS FOR A SUCCESSFUL HOME BUYING EXPERIENCE
Step 1: Get Pre-Approved
The only way to truly know how much home you can afford is to ask a lender. Getting pre-approved lets you know how much you can afford before shopping for your home.
What to Know and Where to Find it:
Income – Stable income assures a lender you can make your monthly mortgage payments.
Debt – Add up auto payments, credits card payments, student loans, alimony, child support, other.
Cash – Total assets, amount in checking and savings accounts and other investments.
Step 2: Determine Monthly Mortgage Payment Including Escrow
Escrow is a third party account used to retain funds including the property owner’s real estate taxes and hazard insurance premiums.
Step 3: Understand Bills Associated with Home Ownership
Estimate that it will cost about one percent of the purchase price year to maintain your home. For a $200,000 home, you should budget approximately $2000 per year, or approximately $170 per month for maintenance. Condominiums and co-ops will have regular maintenance fees. You will also have utilities, gas, electric, water, sewage, cable, telephone, insurance, property tax, etc.
Step 4: Compare the Total Costs to Your Monthly Salary
Subtract the total in Step 3 from your monthly gross income.
Step 5: Test Those Numbers for Six Months
• Set up a new bank account.
• Subtract your current monthly rent from your Step 2 total.
• Deposit the difference in these numbers into the new bank account on the 1st day of each month.
• After six months, determine how simple or straining the process turned out to be.
Step 6: Establish Future Priorities and Plan for the Unexpected
• What are your needs for the new home –furniture, lawn equipment, barbecue grill?
• Is a new car in your near future?
• Do you plan to have children?
• How long can you survive if you lost your job?