Dublin Real Estate-The dollars and “sense” of home loans
Thinking of buying a home in Dublin, Ca? Been saving up for a down payment? If you are like most folks, you will need a home loan to make this dream a reality. But how much can you actually afford for a house payment? It is easier to figure this out than you might think. Take some time to consider the following ideas. This will help you wrap your head around the whole financial picture. With more stringent lending practices in place today, there is a more involved process for obtaining financing. Plus, in today’s fast moving real estate market, securing your financing truly is the first step before getting in the car and looking at homes. So let’s start at square one: Financing.
Think about a down payment. A minimum down payment is between 3.5-5.0% of the value of the house, depending on the loan program you go with. Next, add up your current monthly debt obligations, for instance car loans, credit cards, and personal loans. Things like alimony, child support or any court ordered repayments need to be factored in as well. Once you have this figure, calculate your gross monthly income (what you bring home after taxes) Now that you have your liabilities and your income figured up, what could you take on for a mortgage payment?
A mortgage payment will consist of principal, interest, and property taxes. A mortgage loan is technically secured against the value of the house, but in fact is really against your income. The bank will be looking at the formula of income to offset liabilities/debt. Lenders nowadays do not want your housing costs to exceed 33% of your gross monthly income and do not want your total debts, including this new housing expense, to exceed 38% of your gross income. This percentage will vary by lender and loan type but it is advisable to keep that percentage on the lower side to make sure you won’t get in over your head financially. Here is another way to calculate how much income you would need to comfortably buy a house: Mortgage payment + current monthly debts ÷ by .36 = gross monthly income
Once again, before you begin shopping for a home, you need to shop for a loan. Be sure to choose a loan officer you are comfortable with. Applying for a loan is a very involved and personal process. He or she will review your income and debts in detail with you to get a clear idea of your monthly cash flow. When it comes to verifying your income and debts your lender will be thorough so it is important that your loan officer has all the facts so he/she will be able to advise you on the appropriate program and loan amount.
It is sensible to approach the home buying process in this order. This way, you will know exactly what you have to spend on a home. This is where we come in. Give us a call, and we will custom tailor a home search for your specific needs and budget. Now lets get in the car and shop for a home!
