It’s never too early to connect with me to figure out your home buying game plan. Thinking of buying in 6 months, 1 year, 3 years? It’s time to sit down for a consultation so that you can get on track & stay on track until you’re ready for that set of keys.
BUT MONEY....
Here are some things to consider when deciding if you're financially ready to own a home.
As a general rule, experts recommend that you spend between 28-36% of your take-home income on housing (including principal, interest, taxes & insurance, HOA fees and PMI). If you’ve somehow managed to avoid having debt (woohoo), you can stretch the monthly housing allowance to 40% of your take-home income.
Ultimately, your mortgage payments should be a balance of what’s comfortable for you to spend on a monthly basis and what your lender will approve you for. Here are a few factors to consider when gauging whether buying a home is something you can afford.
Read on for more details regarding each factor.
SAVINGS
It’s important to make sure that buying a house isn’t going to completely wipe out your bank accounts. Aside from the down payment, there will be other purchase related expenses such as home inspection, appraisal, attorney fees and closing costs. Don’t forget moving, furniture, updates to the home, routine home maintenance, etc. And now that you’re a whole responsible adult, you probably want to keep some cash on hand for emergencies.
Good news though! You don’t need 20% down to purchase a home. The average down payment hasn’t been that high since 2005. FHA loans have a minimum down payment of 3.5% and there are even certain conventional loans that require as little as 3% down.
LOCATION, LOCATION, LOCATION
Northern NJ is an incredibly diverse collection of neighborhoods. Every neighborhood is different, and prices can vary drastically from one area to the next. Working with a local real estate agent will help you determine areas that meet both your lifestyle and financial requirements.
It’s also important to keep other location related expenses in mind - everything from property taxes to flood insurance can impact affordability greatly.
DEBT
When getting pre-approved for a home loan, lenders will take all of your outstanding debt into consideration for your mortgage loans, including student loans, credit card debt, car loans, or other recurring debts. Your DTI shouldn’t be higher than about 40% of your gross monthly income (including your housing expenses). What's a DTI? It's your debt-to-income ratio, which is all your monthly debt payments divided by your gross monthly income.
If you don’t have debt — congratulations! — you’ll have a larger range in terms of what you can afford.
PSST - worried that student loans will keep you from owning a home? That’s not necessarily true.
INTEREST RATES
Part of what determines your interest rate is your credit score. If you’re a low risk (high credit score) borrower, your rate will be lower. The lower the rate, the more buying power you have. I work closely with amazing lenders to help guide you in the right direction to meet your financial goals and search for a home with a monthly payment you’re comfortable with.
And yes, the rates are higher than they were last year. But that shouldn't necessarily stop you from buying. It's important to do the research and assemble the right team to determine the best option for you.
WANT TO LEARN MORE?
LET'S DO THIS!
There are so many options for different loan types, terms, and even assistance programs to help with things like down payment and closing costs. Generally speaking, the stronger your credit and the higher your down payment, the more flexibility you have in your home search and funding. However, even if your credit isn’t perfect and you’re nowhere near having close to 20%, don’t count yourself out.
The first step is getting your thoughts and wants organized and educating yourself. And that’s pretty much my specialty.
DID YOU KNOW
STILL ON THE FENCE?
Grab a free copy of my homebuyer checklist, and learn what the process is like.
Hi I'm Meg & I'm not your mother's REALTOR.
As a former wedding planner, I have a unique skill set that I use to help home buyers navigate both the logistics and the emotions of buying a home. I don't think of myself as a salesperson - I'm your real estate coach, your logistical coordinator, your house hunting BFF, and your cheerleader.
I don't want to sell you a house, I want to help you manifest homeownership.
MEGHAN RAMSAY
contact
142 ROUTE 23 NORTH
POMPTON PLAINS, NJ 07444
973-686-1500 x259 (o)
201-892-4866 (m)
homes@megramsay.com
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