You’ve decided — you’re making the big move. Now is the time; you’re going to buy a home. What next? Before you begin you search and fall in love with a home that is way out of your price range, you should set a home-buying budget. Okay, great. How do you to that? There are a number of home mortgage and home budget calculators that you can use online, but almost all of them rely on similar criteria. Here are the things to consider as you begin to set your home-buying budget.
Gather Some Data on Your Income and Expenditures
Before you figure out how much home you can afford, you’ll need to do some research on yourself. The first step in this process is to determine your overall income. This includes both your income and your partner’s income if applicable. Your income may include your salary and any earnings from investments, alimony, or any other source. Once you’ve determined your total income, you’ll want to determine your expenditures. This is where using something like a budgeting app can help. Looking at bank and credit card statements can give you an idea of how much money you’re spending on a monthly basis.
Do You Know the 28/36 Rule?
Once you determine your monthly income and expenditures, you can begin to estimate what kind of mortgage payment you can afford. (You’ll also need to factor in homeowners insurance, property tax and mortgage insurance.) When estimating how much money you can put toward a downpayment and subsequent mortgage payments, it’s a good idea to follow the 28/36 rule. This is a general financial guideline which states that you should spend no more than 28% of your monthly income on housing, and you should spend no more than 36% of your monthly income on debt in total (that would include a mortgage payment, student debt, and auto loans). Following this guideline can help you account for unexpected expenses and stay out of financial trouble.
Know Your Standing Before You Apply for a Mortgage
It’s important for you to know this basic information about yourself before you apply for a mortgage. You should know your income information and your expenditures for each month. You should also know your credit score and how much money you can reasonably set aside for a downpayment. These factors can help you set realistic expectations about the terms of the mortgage you will receive. You don’t want to be blindsided during the mortgage pre approval process.
Bill Swanson Is Ready to Help You Buy Your Omaha Home
Purchasing a home is exciting, but it also comes with plenty of hoops to jump through. Bill Swanson is here to help. Bill has over 25 years of experience helping families buy and sell homes in the Omaha area. If this is the year you purchase your first home, work with Bill. To start your home search with Bill Swanson, contact his office in Omaha, NE at 402-679-6566.
Buying or Selling a Home in Omaha? Call Bill Swanson Today!
As a long-time resident of Omaha, I know the area and the surrounding communities intimately, and can give you access to information that you could never find online. If you want to know more about the community, are looking to buy a home in a new one, or need the help of an agent to sell your home quickly, conveniently, and successfully, then email [email protected], or call (402) 679-6566.