First step: Figure out how much you can spend. Every day we turn on the T.V. we hear about people losing their homes to foreclosure because they cannot afford the payments. The first and most important step in buying a home is to figure out how much you can afford to spend, then stick to it. So the question becomes how much can you afford? FHA guidelines say your total monthly mortgage payment should be less than 29 percent of your monthly income. The number arrived at after multiplying your total monthly income by 29 percent is referred to as principle, interest, property taxes, and insurance (PITI). The PITI amount is the highest amount that your monthly mortgage payments can be with an FHA loan. Also FHA takes into account your total debt such as car loans and credit card balances. That debt plus your monthly PITI amount cannot be more than 41 percent of your total monthly income. Click here for more FHA loan information.
While the FHA has their guidelines you may consider your own guidelines based on your comfort level. Some financial planners will recommend you only spend 25 percent of your monthly take home pay as a comfortable monthly loan amount. I recommend you talk to your financial planner of a mortgage broker for the plan that works best for you. One final piece of advice, make sure your real estate agent is working for you. If you tell your agent you can afford $1,300 a month payment, and they are showing you properties that would require you to pay $1,400 a month if your offer was accepted, you have the wrong agent. Your agent needs to be looking out for your best interest. That is their fiduciary responsibility. It’s only $25 a week more is not a good answer. That is what gets buyers in trouble.
When you decide how much you can spend contact me and I will help you find a home that fits your needs and wants.
