Home Buying Tips
Before you start looking for a new house you need to evaluate your financial situation and your current financial assets. It is very important to determine the exact amount of money that you can utilize in purchasing your house as it will affect the entire process of buying your new house.
Things That Every Home Buyer Must Ask First:
How much cash will I need for the down payment?
The exact cash amount that you have to give as down payment will determine the type of loan that you need.
What is earnest money?
Earnest money is the minimum payment that you offer to pay to the home seller in advanced just to make the deal concrete. This earnest money is deposited with the title company and is not returnable if the buyer withdraws the offer and it happens opposite if seller withdraws the offer. It is customary for the earnest money to be 1% of the sales price of the home.
How much money will I need for closing costs?
Closing on the house sale there is a standard procedure and it involves some fixed costs to that both buyer and seller have to pay. Your mortgage broker can break down these cost for you.
What is the maximum amount of monthly mortgage premium that I can afford?
To determine the maximum affordable mortgage payment apply 28/36 rule
The 28/36 Rule
Your real estate tax, mortgage and other insurances should not exceed 28% of your total income and no more than 36% of your gross income can be applied to your mortgage expenses plus your regular debt expenses (car payments, credit cards, other loans, etc.). Similarly not more than 36% of your total income can be paid in mortgage needs and other loan needs that include all other debts, car loan, credit card etc.).