All in one place, your first time homebuyer checklist:
1. Determine how much you can afford.
Use the 28/36 Rule
What is “affordable” is subjective and varies depending on your unique circumstances.
However, many lenders use the 28/36 rule as a guideline for assessing mortgage borrower risk (your ability to repay your home loan).
In the 28/36 rule, each number represents a percentage of your debt to income.
The first number, 28, means no more than 28% of your gross monthly income should be used to pay all housing debt.
Housing debt includes your mortgage payment (principal and interest), property taxes, and homeowner’s insurance.
The second number, 36, means no more than 36% of your gross monthly income should be used to make your total monthly debt payments.
Your total monthly debt payments include your housing debt, plus any other monthly debt payments you have to make, such as student loans, credit cards, and car payments.
If your housing and/ or total debt ratios are higher than 28/36, you may still qualify for a loan, but may be charged percentage “points” (more interest) due to the higher risk you pose to the lender.
Use Common Sense
Buying the “home of your dreams” can only happen if you are not too financially strapped to enjoy it.
If you envision yourself in the future sharing a stress-free and happy home with your loved ones, part of that vision requires financial wisdom and planning.
2. Get Pre-Approved for a Mortgage Loan
Pre-qualified vs. Pre-approved
3. Find a realtor
If you don’t trust your newly-minted cousin quite yet, we can connect you with a realtor experienced in negotiating the type of property you want to buy.
If you need a local realtor so you can get the best deal given today’s market, fill out the form below to be contacted ASAP.