Your employer is transferring your job to Maple Ridge, and now you’re on the hunt for a new home. Before you decide to purchase that beautiful home with the huge yard, you need to figure out how much house you can afford. Houses for sale come in a range of prices, and you don’t want to buy a home that will keep you in debt for a long time. Here is how you can figure out how much home you can afford.
Think About Other Debts
When figuring out how much of a home you can afford in Maple Ridge, you need to think about the other debts you have. These include your monthly bills, credit card debt, student loan debt, child support obligations and other types of loans you owe. If you already have excessive debt, then it will affect the kind of home you’re able to buy.
Don’t Go By the Amount on Your Pre-Approval Note
So you’re excited about the pre-approval note you received from the lender, and you’ve been approved for up to $300,000 for a mortgage loan. This does not mean that you should borrow the maximum amount. Once you go over your income and current debt, you might decide to buy a home that costs $150,000, or if you want to move to the city, buying houses for sale in maple ridge under 400k.
Consider the Down Payment
If you have not saved enough money for a down payment on a home, then this affects your affordability chances. You would need to put at least 10% of your future home’s payment down, and some put 20% down. If this is a struggle for you, you can search for lenders that offer the lowest rates for mortgages.
Check Your Credit Score and Report
Another factor in determining how much home you can afford is your credit score and report. You will need a score in the range of 600-800 to qualify for most lenders, and it is important to review your credit report once a year. Pay down as many outstanding debts as possible before buying a home and dispute any errors on your report. When looking for a home, it is not wise to apply for new lines of credit as this affects your credit score negatively.
Income Matters Too
Your income also matters when purchasing a new home. Lenders examine your debt-income ratio, and if you have more debt than income, then there is a chance that you could be rejected for a home loan. If you just started your job, now is not the best time to seek out a home. You need to have a few years of steady income under your belt to determine how much home you can afford.
You Will Have Major Expenses After You Buy The House
Another thing to think about is the endless list of expenses that are associated with buying a home. The expenses include closing costs, monthly mortgage payments, appliances and furniture for the home, property taxes, maintenance expenses and other costs. You should figure out if there were room in your budget for these expenses if you buy the home.
Don’t Get Tempted by Others’ Expectations
Only you know how much home you can afford based on the above-mentioned factors, so don’t let others’ expectations cause you to purchase a home that will be financially unwise for you. Your mom might think you should live in a middle-class area because your income allows it, but if you are happy with living in a more affordable working class section of town, be okay with this.
Will You Receive Financial Assistance from Family?
In some cases, you might get financial assistance in buying a home. Your parents could offer to help you with the down payment as a wedding present. Or your brothers might combine their funds to help you with the closing costs of a home. This is another factor in determining how much home you can afford.
Additional Tips on Buying a Home
One great way to buy an affordable home is to purchase a foreclosed home. Remember that if you are purchasing a home from an auction, you will have to pay in cash. It also helps to look at the properties’ values before bidding and making a purchase. According to RealtyTrac, it is wise to bid at 80% of the value of the home you’re interested in.
Low-income families are not totally excluded from affordable homeownership. These families can buy a HUD home. It is advised to inspect a potential HUD home since there are no guarantees that these homes are in the best shape. One of the best ways to purchase a HUD home is to apply for an FHA loan. With an FHA loan, the down payment can be as low as 3%. Some cities and states might offer grants to assist you with buying your HUD home.
Long before you decide on how much of a home you can afford, it would be advisable to save as much money as possible because this reduces some of the expenses you’ll have before and after you purchase the home. You should also set up a separate emergency fund to assist you should hard times occur as a homeowner.
You also want to get the assistance of a Realtor when searching for an affordable home. The realtor understands real estate trends well, and they know which neighborhoods best suits your budget and preferences. However, it is okay to disagree with the realtor during the search process.
In conclusion, with these tips, you will be able to buy a home that is affordable, and that matches your preferences at the same time.