How You Should Spend to Buy a Home
Buying a home is one of the massive investment a person makes in his or her entire life. The decision to purchase that home has some serious consequences not only for you but the whole family when it comes to financials for many years to come. A wrong decision could ruin your peace and family for nearly the rest of your life.
First Thing:
First things first. You should be sure that you can afford the home that you would like to buy. It entails the down payment, monthly installments, taxes, insurance, and its upkeep. Keep in mind that money is not the only factor here. There other factors that should be considered like the comfortability and the location (Which is a must). A house could be cheap, but the other factors like the locations could be miserable. If you purchase that kind of a house then, things could turn out ugly.
How to balance your Money?
You may wonder. How do you balance the money factor with the personal factors? Here is how. First, before you make any purchase make sure that the home that you want is not four times as much as you make. For example, if you make around $ 120,000 a year and you have no debt payments whatsoever, then your home should not exceed $ 480,000.
But let us say your payments totals to about $ 3,000 a month. Then calculate $ 3,000 * 12. Which will be $ 36,000? So, subtract from the $ 480,000. You will get $ 444,000. So your house cost should not exceed $ 444,000. This is just an example when the financial gain is constant. But things may change for the better or for worse.
Debt to income ratio
Secondly, you might want to look at the debt to income ratio. This includes your regular gross monthly income to your fixed payment obligation. Banks and other potential lenders like to lend money if the debt to ratio income is below 40. Otherwise, if the debt surpasses the income ratio, then it will not be possible for you to qualify for a loan.
Where the house is located
Thirdly, take a look at where the house is located. Is the place accessible? Is it comfortable? How are the roads? How far is it from town? These are the kind of questions that you should ask yourself. Before making any decision to buy a specific house, this point should be the first to pop in your head.
A home is a place of comfort. A place of peace. A place of love. Each home has its price. This depends on how much you earn.
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