Calculate Your Home Buying Budget
Purchasing a home is one of the biggest financial transactions you will ever make. Finding the right that fits your family’s needs and budget is the first step in the process to buying your dream home. Before beginning your house hunt, make sure you know just how much house can you afford?
Planning Ahead of Buying a Home
It’s important to consider what your family plan is in the coming years when deciding just how much you can spend. Are your children going to be driving in a few years or heading off to college? Consider any loans you may be co-signing for, additional insurance costs, tuition, books and spending money you may be asked to contribute.
Your Debt to Income Ratio
Your debt-to-income ratio is something lenders calculate when considering you for a loan. It’s a number you should consider too when budgeting for a home purchase. A conservative buying approach is to calculate no more than 28% of your income will go towards housing costs and 36% to your debts (car loans, credit cards, student loans). A moderate figure is 33% for housing costs and 38% of your income a month to pay off debt. An aggressive 36% for housing costs and up to 41% a month to pay off debts may be risky. Your debt-to-income ratio may be 40%, but an unexpected event and kids can cause that figure to increase to 50% overnight. Your credit may also be a factor. Without perfect credit, lenders may not approve with an aggressive debt-to-income ratio.
Sometimes the Numbers Don’t Work
If you cannot afford the house you adore, there are options to find an equally great alternative you can budget for. Try looking in surrounding neighborhoods or the next zip code. These areas may be slightly less expensive but still offer you your dream home. When looking for a home, it makes sense to plan ahead. Choosing a budget you will be comfortable with in the coming years is a huge part of your home ownership dream. And when choosing the best title insurance company in Georgia, contact Wharton Law. Wharton Law in Atlanta and Fayetteville is continually providing a superior level of service to clients that begins with obtaining a firm understanding of the issues affecting the client. Trust your legal needs to Wharton Law at 404-965-2767.