Are You Ready To Buy
a Home?
Most people who rent the home in which they live could afford
to buy a home with the right planning.
In
order to know about your homebuying potential, it will be useful
for you to take a look at your income, savings, monthly expenses,
and debt. All of these are important factors in how much mortgage
you can afford and also in how purchasing a home can affect
your monthly budget.
Together the following four categories are a
guide that will give you a better understanding of your financial
situation. Just print this page, and fill in the blanks for
each of the categories listed. Use this information when you
visit the Affordability Calculator.
Review your income. Purchasing a home may require
that you have a certain amount in savings that can be applied
to your down payment and closing costs. If you don't have a
lot of cash available, there are loan programs available (especially
through FHA and VA mortgage programs) that do not require much
cash payment at closing. Some questions to consider:
On average, what is your monthly income?
Will your income remain stable in the near future?
Are you expecting any increase or decrease in income in the
near future?
Here is an example of some income categories to help you estimate
your monthly income.
Review your savings. A little savings can help
a great deal when planning to purchase a home. There are some
costs that you cannot finance through your loan; you have to
pay those at closing, the day that you buy your home. Some questions
to consider:
What portion of your income are you saving?
Can you save more money than you are now?
Here is an example of some savings categories to help you estimate
your monthly savings.
Monthly expenses may increase. The purchase of
your home will likely change how much you will need to spend
on expenses every month. If you have trouble saving now, your
finances may be too tight with the purchase of a home. Some
questions to ask yourself:
How will the purchase of a home affect my monthly
budget and my ability to save?
Can I support the additional expenses that the purchase of a
home will bring?
Do I expect to maintain a stable income for the foreseeable
future?
Here is an example of expense categories to help you estimate
your monthly expenses. This can be useful to determine your
current monthly expenses and to estimate how these expenses
will impact your budget.
Review your debt responsibilities. Consider how
your debt in relation to your income will influence a lender's
decision on your mortgage loan amount. Carefully consider how
additional debt from house payments, on top of your existing
debt, will restrict your lifestyle. Some questions to ask yourself:
How much debt can I afford to manage comfortably?
Will I be able to manage my debt responsibilities through the
life of my loan?
