How Much Home Can You Afford?

One of the first thing most people should ask themselves when searching for a home is, "what can we afford?" There are many methods and calculations to determine this but the one that follows is the standard that is used. Try it out.


Step One: Determine your gross monthly income from all your sources (spouses, other income,
etc. )

Step Two: Multiply the amount above by .28 (28%),
Or
Multiply the amount above by .36 (36%) if you have no regular debt.

Step Three: Subtract your current monthly debt you pay out.

Step Four: Subtract any other monthly expenses you have now.

Step Five: This should give you your maximum monthly mortgage payment (Principle &
Interest)

Step Six: Subtract real estate property taxes and homeowner's insurance (make sure you
change these to monthly and not quarterly or six month payments)

Step Seven: This should give you your net monthly mortgage payment.


Another place to go to do this online is http://finance.move.com/

There are many other sites to check this online, just search for "How much home can I afford?"

Hope this helps. Give me a call (937-423-3316) or email (trfinch@gmail.com) or leave me a question or a comment.

First-Time Homebuyer - Part Three

Once you've selected an agent who you're comfortable with and talked to a loan officer to determine what you can afford it's time to sit down and get together a list of what you want in a first home.


What Are Your Basic Needs?

1. How many bedrooms are essential?
2. One, One and a half, or two bathrooms?
3. Living room, family room, or both?
4. Eat in kitchen or separate dining room?
5. Office space?
6. Storage space?
7. Garage - attached or detached? Size one, two, or more cars?
8. School district?
9. Close to town or outside and how far?


What Additional Items Would You Like?

1. Laundry room?
2. Built on a slab, crawl space, or basement?
3. Outside entertainment area? Deck, patio, backyard?
4. Type of heating?
5. Overall condition of the house - appliances, roof, mechanicals, foundation,
etc.
6. Attached master bathroom?
7. First floor master bedroom?

Add others to match your desires.


Make sure your basic needs list are met first for each place before going on to the additional items. By answering these basic questions and any others you choose to add you will be able to start assembling a list that will greatly aid your agent in finding homes for you on the MLS (multiple listing service) and then setting up showings.

Any questions or comments? I'd love to hear them.

First-Time Homebuyer - Part Two

There are two people you want to get working for you right away as a first-time homebuyer: first, a qualified licensed Realtor and second, a loan officer.

It is very important when choosing a Realtor that you ask a number of questions including:

1. Are they a buyer's agent, a seller's agent, or a dual agent? (See below for an explanation.)
2. How well do they know the area where you are looking?
3. Do they work on weekends?
4. Will they work with your schedule?
5. How long have they been a Realtor?
6. Do they specialize in a certain type of property (e.g, farms, first-time homebuyers, downsizers, commercial, growing families)?
   

You should communicate to your Realtor what is the best way to contact you, whether by email, cell phone, work phone, or home phone. It is also very important to meet with the agent in person to make sure that you are comfortable with him/her, that you think alike, and that he/she is approachable. Remember you may be working with this person for a long time and you want to be able to trust that he/she is working for you at all times.

Now an explanation of the types of agents:

Buyer's Agent - This agent is working for you and you alone. They will generally be paid only after the closing and will split the commision with the seller's agent. Also, in most cases the seller pays the commision. The agent should not disclose any information about you to the seller or to the seller's agent.

Seller's Agent - This is the listing agent and has been contracted by the sellers to list their property for sale. This agent should likewise not disclose any information to the buyer or to the buyer's agent.

Dual Agent - This is an agent that will be working for both the buyer and the seller. This often happens when the agent has shown a house to a buyer that he has also listed for the seller. The critical point here is that this agent cannot disclose information to either party about the other.

A Realtor is a real estate professional who is a member of the NAR (National Association of Realtors) and has adopted the NAR code of ethics and practice standards. He/she has taken the required hours of classes to qualify to take the state and federal tests and then pass them.

For more information on why it is important to work with a Realtor, check one of my earlier posts in this blog or leave me a comment or question.

First-Time Homebuyer - Part One

You're ready to buy a house!


A home can be one of your best investments if you do your research and don't rush into it. In the next series of posts I will try to answer a lot of questions a first-time home buyer might have and prepare you for that most important step. If you have any questions, feel free to leave them in the comments section and I'll respond as quickly as possible.


What are the advantages of owning your own home?

• It's yours and you can do what you want with it (in most cases)
• When filing taxes, you can deduct your mortgage interest (if you itemize)
• You can deduct the points paid for your loan (with some exceptions)
• You can deduct your property taxes
• There are other closing costs that may be deducted
  
• It will increase in value (appreciate)
• You gain equity with every payment you make (you can't do that with rent $)
  
• You may eventually borrow against your equity

The process of buying a home can and should be a long one. Make sure you ask many questions of your real estate agent and your loan officer. The reward for your diligence and patience will be a higher degree of satisfaction and confidence in your decision.

Free Credit Report

Is it important to know your credit score? Do lenders really pay attention to your credit score? The higher the better? The answers are yes, yes, and yes.

FICO (Fair Isaac COrporation) is most commonly used scoring for your credit. If you break the scoring down, 35% relates to paying your bills on time, 30% to the amount of debt you owe, 15% to the length of your credit history, 10% to credit accounts that you've recently opened, and 10%to the various types of credit used. (You can learn more about FICO by going to www.myfico.com. ) Technically you have three different FICO scores from the three major credit reporting groups: Experian, Equifax, and Transunion.

The higher your score, the better the interest rate you may get or bargain for, which could save you thousands of dollars over the life of a loan. You can check your own credit reports by using the free credit report available to all at "annualcreditreport.com". Checking these reports will show you your credit information but in most cases you'll have to enroll to get your credit score number. You may get a report from each of the three credit reporting agencies mentioned above each year for free. It is simple to do and well worth your time.

There are other credit reports online, but most require a fee and some are just scams, so stick with the above mentioned reporting groups.

By All Means Choose a Realtor

So you’ve decided that the time is right to become a new homeowner. You know that the first step is to decide how much you can afford and then search the Internet. That's a good start, but do you really know how much you can afford and how to search for that perfect home?

By connecting with a Realtor you will have taken a step that will save you a lot of headaches in your home search, and he or she will be your guide throughout the entire process.

A Realtor can:

• Help you determine what you can afford
• Connect you with a home mortgage expert
• Provide more home search possibilities
• Narrow your search to help you find what you really want
  
• Save you time by not looking at houses that don’t meet your requirements
• Help determine home values
• Set up showings
• Provide you with valuable information before making an offer
• Guide you through the offer procedures
• Help in the negotiating process
• Connect you with people to help with inspections
• Guide you through the closing process

A Realtor should:

• Communicate with you by the means that fits you best, whether it's by email, phone, or fax
• Pay attention to your needs and desires when performing home searches
• Provide data for you when determining what to offer
• Not disclose your private information
  

By all means use a Realtor.

Todd Finch

Leis Realty Co.

Greenville, OH 45331

email: trfinch@gmail.com website: www.darkecountyproperties.com cell: 937-423-3316

Whether you are thinking of buying or selling, let me help you make the most of every opportunity.