How do you decide on whether you are financially prepared to handle a mortgage or not? Don’t get your heart stuck on a house that is out of your buying range because even though you might get the loan to buy it, you won’t be able to afford the monthly payments.
However, there’s still a kink in this plan, if you do decide to take this path. The lender grants you a loan based on your current financial situation and employment. So, all in all, you won’t be able to afford a mortgage if your bank account doesn’t agree with the amount.
Don’t worry! We are here to give you a few tips on how to figure out your mortgage range. Consider the following points before approaching a lender and you will definitely breeze through your monthly payments:
1. Prepare a Comprehensive Budget
When it comes to buying a house, the rule of thumb is that you can usually afford a home for sale in Sandy Springs, GA that is priced 2 to 3 times above your gross income. Say your income is $150,000. You can buy a house that falls between $250,000 and $350,000.
However, let’s say that out of the $150,000 you earn, $1,500 goes into monthly payments. So, now you are a few thousand dollars short, which means that your monthly payments will be affected. This is why you need to prepare a budget that lists all your expenses. Subtract from your income and you will find the accurate monthly payment you can afford.
2. Don’t Forget the Down Payment
One of our previous blogs has covered why putting a 20% down payment is not necessary. However, if you do pay 20% down payment, you will not have to buy private mortgage insurance. Look into the interest rates each lender is offering and then make a decision. For your down payment, you can dip into your savings account, if you think the home for sale in Sandy Springs, GA is worth the asking price.
3. Find Out If You Are In Debt
All your monthly payments that include only the necessities must not go above 43% of your annual income. Here’s how to calculate this 43%:
- Say your annual income is $150,000
- Multiply $150,000 by 43% and you get $64,500
- Divide $64,500 by 12 months and you get $5,375
Your monthly bills should not go above %5375.
4. Rent vs. Buy – Your Mortgage Guide
Are you renting a house right now? Calculate all your monthly expenses and then compare it with the monthly expenses of owning a house. Don’t forget to factor in the yearly increase in rent. If you are struggling with the rent and other payments, then it is better to buy a house in the same amount. At least, this way you will be saving a lot.
If you are planning to buy a house, then do use these tips to calculate your monthly payments. The question you should ask yourself at the end is: will you be able to afford it? Looking for a home for sale in Sandy Springs, GA that will fall under your budget? Head on over to America’s Network Realty Group Inc. and find your dream house by entering a few details.