The easiest and most direct way to determine a home-buying budget is to first meet with a licensed mortgage lender to get pre-qualified. During this process, the lender will pull your credit, evaluate your income and expenses and provide you a price range that you can use to shop for homes. The lender will also provide you an estimate of the cash you will need to come up with, for all of the associated expenses. In some cases, depending on where you choose to buy a home, you may even qualify for down payment assistance or grant programs. Be sure to seek out a knowledgeable and experienced lender. The Donnelly Group can provide you a list of preferred local lenders, although you are always free to work with any lender you choose.
After you’ve met with your lender, you will want to sit down and review all of the expenses associated with owning a home. In addition to normal expenses like gas, electric, phone and cable, you will also have to budget for unexpected expenses, like repairs. Unfortunately, appliances, heating and air conditioning units and hot water heaters are among the most expensive items to repair and/or replace. So, you’ll want to be sure your budget includes a ‘rainy day fund’ for these types of items.
Your lender can provide you a payment estimate that includes principal, interest, taxes and insurance, often referred to as PITI. However, you will want to keep in mind that the taxes and insurance can fluctuate and in some cases, the interest can vary. So, it’s important to understand which items are likely to increase so that you can plan accordingly.
By analyzing your budget carefully, you can determine a practical home buying budget that won’t put stress on your finances or result in a mortgage payment that you can’t afford. Once you have a budget you feel comfortable with, you can begin the process of searching for your next home! The Donnelly Group is devoted to being your guide, your expert, your resource, your advocate. Contact us today for a tour of homes in your area and your budget!