You may have been renting a home for some time, and occasionally you see a “dream” home you think you could afford. The problem with a buy decision is you can’t simply compare your current monthly rent to an estimated monthly mortgage payment.
A home mortgage transaction requires more ready cash than you may have available at any time. You will need to provide funds for closing costs, home inspections, a down payment, mortgage insurance, and so forth. Although some of these costs might be rolled into your mortgage, that will raise your monthly payment more.
The debt may be more than a Investor will Endorse
Mortgage Investors look at how much income you have, and factors such as the income to debt ratio to decide whether you can afford a specific mortgage. If you have other debt, such as a car payment or high credit card debt you may not qualify for a home mortgage.
Your monthly payment may only be part of the story
Even if you qualify on the basis of income and debt ratios, you need a lot more cash to own a home than if you rent one. Property insurance, homeowners association fees, maintenance costs, even utilities that might have been included in your rent will all add to the monthly cost of owning a home. You may find that owning will exceed your comfort factor, or even put you in financial peril. Once again, you can’t simply compare rent and monthly mortgage payments when making this decision.
What if you need to move later, or more importantly, sooner?
You need to consider your employment status, because in today’s economy jobs are perhaps not as guaranteed or assured as they once were. You may need to relocate to keep your current job, or will need to seek employment elsewhere. If you think this will happen sooner rather than later, perhaps this is not the best time to buy. Also, home values rise and fall. If the market is slow you may have trouble selling your home, which will complicate trying to relocate for a new job.
What can you do now to help make that decision?
•Calculate all your debt. Look at your cars, credit cards, student loans, and any other debt you may not have considered. You may not think of it as important, but the Investors will.
•Determine how much cash you have available. It will take more than you may have considered to finalize.
•Make sure you have enough money available to make the down payment. Investors may ask for as much as 20 percent of the home value, and trying to reduce that amount raises the monthly mortgage payment.
•Look at real estate values and market trends in areas where you might consider owning your home. If they fluctuate widely or are dropping, you may wish look elsewhere in a more stable market.
•Get the financial privilege for a mortgage loan. Go through the process of endorsement, because it not only tells you what you can afford, it also will force you to review your finances in detail and discover any pitfalls that would occur in the middle of the home-buying process.
AHL Hard Money Loans is always available to discuss your loan needs, and our Private Investors will be able to help you today. Call us today at (813) 368-9919. Remember that our team can help you get Mortgage loans using the equity in your home, Home equity loans bad credit, and even