Buying Skills for The Average Buyer
Tips on how to sell a home during every economical high and low are abundant, but what about buying? The real estate and loan market is always adapting to current economies. Real Estate buying skills need to be honed to facilitate confident purchasing of real estate property. Responsible buying is needed now, more than ever, in our country’s ever changing financial landscape.
Keep Your Head. Don’t let yourself be convinced to spend more on a property than you can actually afford. It is easy to over extend yourself when there are multiple offers on a home you want to buy and your agent says you will need to offer more. Ultimately, you are the one who knows your own finances and monthly spending habits so you have to keep your head and know when a purchase will over extend you. It is easy to convince yourself you will cut here and cut there to afford your new home but a better practice is to stay in a budget that doesn’t depend on giving the kid’s braces back to the dentist or swearing to eat ramen noodles three times a week instead of one. Don’t guess…do the math.
Doing the Math. The general rule in qualifying for a mortgage is that your debt-to-income ratio be no higher than 28/36% on conventional loans, and 31/43% on FHA loans. The reason for this general rule is because lenders know and studies have been done to show this is typically what is needed for a home owner to keep up with their mortgage while still supporting the other areas of their financial needs each month.
Don’t bet on a possible raise, or a possible scenario, do the actual math to see what your real monthly income is and how much you spend on a regular monthly basis. Check the average utilities of the new property to use in your math, and any other new expenses you might incur by your new location. Getting pre-approved for a mortgage will help you look at only homes you can actually afford. What we want and what we can afford are too often different beasts. If you already know what you can afford, then you can stop yourself from looking at what you can’t afford to avoid watering down your view of what you can.
Dreams are a goal but logic is a must. Everyday we are bombarded with media that makes us think we need bigger and better. We are shown lifestyles on our televisions, magazines and movies that the average homeowner can not practically afford. We are fed ideals of where we should live, how we should decorate, and the amenities we must have. The old belief in buying something less and then turning it into more has turned into many new buyers thinking they must own the showplace house now, instead of working up towards that dream.
Make your dreams a goal but let logic rule and use vision. Look at homes with potential for improvement, homes with a little less amenities, yet just right for your family and budget…homes you can afford, not ones someone else thinks you must have. Only you know what makes you comfortable, how much you want to be a slave to a house, and what kind of lifestyle you need. Other people in your life including your family and even your agent might want to tell you what you want and need, but in the end it is your responsibility to be firm with yourself to avoid disaster months down the road.
Our home needs to be our haven from the world, not an albatross around our necks. You can create your haven simply by learning a few skills and practicing responsible buying.