January 6, 2020
Do you feel that you’re ready to buy your first home? Tired of paying your landlord’s
mortgage? Do you want to put down roots and start building equity for yourself? There are
many reasons why people decide it could be time to buy a home. The costs associated with
buying and owning a home can feel overwhelming but fortunately there are simple steps you
can take to see if you can afford to buy a home.
Talk With a Lender
The best step you can take to start your home buying planning is to find a good lender and
meet to talk about your financial situation. Your lender will look at your income, savings and
credit and then talk about your needs. They will help you explore the loan options available to
you and the down payment, saving reserves and closing costs requirements. Ask your realtor to refer you to a lender or a few to touch base with.
Can You Afford the Mortgage?
Typically rent payments are less than a mortgage payment; this can feel unsettling until you
understand the qualifying formula. Because mortgage interest is deductible (speak with your
tax professional for exact details), most lenders look for the buyers to spend approximately
30% of their GROSS income on the loan payment and no more than 36% on all other debt.
Ex. If your monthly gross income is $5000/month, you can spend $1500/month on your
mortgage payment.
If you think you’re ready to buy a home, find a good lender and start talking about your unique
situation. Learn the costs and benefits to help you determine if you can afford to buy a new
home.
