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Steve Andre
Phone:
510.552.5572
Office:
510.580.6991
Fax:
510.744.3530
License #:
01371685
Email:
steve@steve-andre.com
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How Much Can You Afford? |
The first step as a potential buyer is to analyze you financial situation and to determine exactly how much house you are qualify for and are comfortable to buy. By doing this, a very effective action plan can be develop.
How much down payment? Down payments can range from zero to 99% down. There is no standard amount. It is based on your personal situation and requirements. Every individual is unique in their loan requirements. Your lender can advise you which program is best for you. If your planning on selling a home for the down payment, a "Seller's Net Sheet" can help you pinpoint how much you will be taking away from your current home. Contact me for more information. Many first time homebuyers put 3.5% or 5% down. This will require the buyer to purchase Private Mortgage Insurance (PMI). This of course adds to your closing costs and monthly payments. Buyers putting 20% or more down will not be required to purchase PMI.
What will my closing costs be? These are expenses associated with the transfer of property ownership. As a rule of thumb, these costs can range from about 4% to 6% of the cost of the home. They can include attorney fees, lender fees (points), escrow fees, recording fees, title insurance. Other up front costs that you will want to earmark some of your funds would be for things like, a building inspector to evaluate your home's soundness, and optional expense, but one worth considering strongly. And you many want to make a few immediate repairs prior to moving day. Don't hesitate to discuss these costs with me. The sooner you know what you will need, the sooner you'll be able to determine an accurate down payment figure. How high should i allow for a monthly payment amount? This answer will depend on how much you require for other living expenses. One thing you certainly do not want to do is make yourself 'house poor' or 'payment poor', so that you can not afford the quality of life you envisioned in your new home. As a rule of thumb, your monthly payment, including principal, interest, taxes and insurance (PITI), should not be more that one third of your gross monthly income. Of course, you should adjust this figure for unusual or extraordinary monthly expenses, such as schooling, unusual health care expenses and so forth.
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