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[ Buyer's FAQ's ] [ About a Buyers Agent ] [ Home Buyers Checklist ] [ New Home Building Hints ] [ 10 Things About SW FL ] [ CMA ] [ Understanding CMA'S ] [ Pre-Qualifying Application ] [ Get Prequalified Now ]
- How much house should I
buy? How much can I afford?
- Do I really need to use a buyers agent to buy a
house?
- How do I know if I am getting a good deal on a
mortgage?
- What first time buyer's programs are available?
- How much will my closing costs be?
- How much should I offer for a house?
The answer to this has a lot to do with your
income and the amount of your debt load. As a rough rule of thumb, most home
buyers purchase houses that cost between 1 1/2 and 2 1/2 times their annual
income. For example, a home buyer earning $40,000 per year would buy houses
costing between $60,000 and $100,000. There is, however, a degree of variation
due to the individual market prices of the area in which you are interested. In
some areas, there may not be houses available within that range, so you may need
to spend a bit more. In general, however, your monthly mortgage payment cannot
exceed approximately 28%-29% of your gross monthly income. Your total debt
payments (car payments, credit card payments, etc. plus the monthly mortgage
amount) cannot exceed approximately 36%-40% of your gross monthly income. These
ratios will depend on the type of mortgage for which you are applying. For more
information on mortgages and to begin the application process, see the section
devoted to finding a mortgage.
No. Should you use an Agent to buy a house?
Probably, for two reasons. First, in virtually all situations, the buyer does
not pay a commission, so the services of an Agent working for you are paid for
by the seller. See important information on
buying a house with a buyers agent.
Second, without an Agent, you may be
missing valuable representation of your interests. See the
Agent
page for more information. Many visitors to this Web Site skip the information
on the Agent page and may be leaving themselves unrepresented.
In a word: Compare. There is a good deal of
variation in the mortgage market, not only from week to week, but from lender to
lender. Many newspapers list current mortgage rates for your local area in their
Real Estate sections, often on Saturday or Sunday. Check them.
There are literally hundreds of different
programs available, depending on your location (city, state, or province) and
the mortgage source that you use. The requirements and benefits vary greatly
from program to program. Consult your Agent or your local housing authority for
more information.
The amount of closing costs will depend on
what items are customary for buyers and sellers to pay for in your area.
Traditions vary greatly from one area of the country to another. In some areas,
for example, the buyer pays for title insurance. In other areas, it is the
responsibility of the seller. In still other areas, the cost is split between
buyer and seller. Your Agent can give you specific information on the items that
are customarily paid for by buyers in your area. In addition, the amount of
closing costs will depend on the amount of points you will be paying with your
mortgage loan, since these are generally paid for up-front. (A point is 1% of
your mortgage loan amount). For a discussion on points, see the guest column
Should I Pay Points?
There is no simple answer to that question,
since each property stands on its own. A particular house may be overpriced (you
should make an offer BELOW the listing price), "on-the-money" (you should make
an offer at or just below the listing price) or under-priced (you should grab it
before someone else does!) For more information, see the section devoted to
setting a value on a home.
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