TEAM Metrowest
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Posted by TEAM Metrowest on 1/30/2019

Buying a home may seem like a smart financial move. However, it may not always be the right time or the right move for you. While buying a home is a great investment, you may not be ready to buy a home of your own. The following questions should help you to determine whether or not you are fully ready to buy a house in the near future.


How Much Money Do You Make? How Much Have You Saved?


buying a home is a significant expense. First, youíll need quite a large sum of money for a downpayment and closing costs on the home. Second, to get approved for a mortgage, the lender will look at every part of your finances from your income to your assets. Once the home is purchased, youíll also need quite a bit of capital for expenses including insurance, taxes, HOA fees, emergency funds, utilities, and furniture. You donít want to buy a home only to be overwhelmed with costs. You want enough of a financial cushion to enable you to furnish your home, decorate your home, and not have a completely empty bank account. Thatís why you should make sure that you do make enough money to buy a home.



How Much Debt Do You Have?


If you have established that your income is enough to buy a home, the next thing that you need to establish is that your debt isnít too high. Before you enter into the adventure of homeownership, youíll need to make sure that your bills are under control. These expenses include things like car loans, student loans, and credit card bills. Your lender will put your debt into consideration as a part of your entire financial picture. Your debt (including your proposed mortgage payment) should be less than around 36% of your gross income. Before you take the leap into buying a home, youíll need to make sure that your debt is under control. If you need to take a step back and pay your bills down before you start house hunting, you should as it will make buying a home easier for you.


Are You Seasoned At Your Job?


In order to secure a mortgage for a home, youíll need to show that you have been at the same job for a certain period of time. Your average income will probably be calculated based on how long you have been at the company and your job history. You should be able to explain any income gaps, changes in positions or companies. Otherwise, youíll appear to be an unstable person to lend to. Lenders want to know that youíll have a steady, stable income.


How Is Your Credit?


In order to secure a mortgage, youíll need to have a good credit score. Check on your credit report when you begin thinking about buying a home. If your credit is on the low side, youíll want to work on bringing that score up. 


     




Tags: Buying a home   finances  
Categories: Mortgage  


Posted by TEAM Metrowest on 8/23/2017

Owning a home seems like a logical step in the game of life that most people take. Itís a good investment and better for your finances than renting. Just because it seems like the right thing to do, doesnít actually mean that it is the right thing to do for you and your situation. There are a few clear-cut signs that youíre just not ready to buy a home. 


Your Income Is Too Low


Even if you think that you make enough money to buy a home, you need to take a look at your own finances before you start looking. Youíll need a large sum of money upfront to buy a home, so saving will need to be our thing. Between closing costs and the 20 percent down payment that you should have to buy the home, you donít want to spread your income too thin. Financial experts recommend that your monthly mortgage payment isnít more than around 30 percent of your monthly income. 


Debt Has You Pinned Down


Even if you do have enough money to buy a home and make monthly mortgage payments without worry, you may have too many other bills to pay. If you have massive amounts of student loan debt, maxed out credit cards, or other large loans, you may want to think twice before you buy a home. Lenders will look at whatís called your debt-to-income ratio. Your load of debt should be 38% or less of your monthly income. If you have too much debt, it may not only strain you financially, it could prevent you from getting a loan altogether.


You Started A New Job


Lenders like income and job history to be consistent. If you are coming off a period of unemployment or have just started a new job, you could look like an unstable lender. Lenders typically like people who have been doing the same job for about two years or more. If the stability of your income looks uncertain, you may not just look bad to lenders, but you could put yourself at risk as well. 


Your Savings Is Depleted


You need more than just the down payment saved up to be in a good place to buy a home. There will be plenty of things that youíll need once you move into a new place including furniture to repairs to renting a moving truck. You should have some additional money on hand in case of an emergency as well. 


Buying a home is a huge financial commitment. You should be absolutely sure that youíre ready for the commitment before you dive in.







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