Are You Ready For Home Ownership?
Homeownership is the cornerstone of the American Dream and has been since the 1930s. With home ownership, however, comes an emotional and financial responsibility that not everyone who wants a home is ready for. Search now for homes for sale in St. Paul.
If you’ve never owned a home before you may be thinking that it’s a lot like renting, with benefits. Dreaming of the day you can paint the walls whatever color you like may color the realities that come with such a large investment. These include mortgage payments, taxes, insurance and ongoing home maintenance costs.
Before you go online to virtually shop for a home, or hop into the car to visit open houses, do yourself a favor and ask yourself the following questions.
How much can you afford?
The very first step to take in the homebuying process is to visit a lender. Only he or she can help you determine how much you can afford to spend on a home, based on your income and living expenses. Shopping for homes without knowing how much you can spend wastes your time, wastes your real estate agent’s time, the homeowner’s time and sets you up to be disappointed when you look at homes you can’t possibly afford: those that you can afford will pale in comparison.
What is your debt-to-income ratio?
The lender will perform several calculations, none more pertinent than your debt-to-income ratio (DTI). Most lenders feel safe lending to someone with a DTI of no more than 36 percent of income.
The debt that will be taken into account includes your total monthly mortgage or rent payment, alimony, child support, loan payments (car, student, etc.) and revolving credit payments.
You can determine your DTI by adding up your monthly debt payments and dividing the sum by your monthly before-tax income. Multiply that nu mber by 100 to get your DTI ratio.
If the result is more than 36 percent, you’ll need to work on one or both sides of the ration – the income or the debt. Take on a second job, pay off debt and bring down high credit card and loan balances.
Are you ready to buy?
When the roof leaks or the bathtub backs up you, as a homeowner, no longer have a landlord to take on the problem. Not only is this repair work up to you, so is the cost of it.
It’s important to give yourself a maintenance cost cushion – most financial experts agree that you should set aside at least 1 percent of the purchase price of the home each year for maintenance.
We Can Help
If you’re truly ready to purchase a home, we hope that you’ll allow the Kris Lindahl Team to accompany you down the path to home ownership. We are committed to helping our clients find the best home at the right price. We can point you in the right direction if you’re seeking help with the down payment and/or closing costs and we also offer financial incentives to certain homebuyers.
Don't hesitate to contact us to find out more about how we can make buying your first home easy
Contact Team Lindahl for more information about first time home purchasing.