Three Steps to Becoming a Responsible Homeowner
Posted: June 18, 2015 by Jesse Olive
Becoming a Financially Responsible Home Owner
Deciding whether to buy or rent your next home will obviously determine which direction you end up going regarding a short- or long-term financial commitment. But one of the first steps that must be taken immediately if you do choose to buy is getting preapproved for a mortgage so you know exactly how much you can afford to spend. After you know exactly what you have to work with from a budget perspective, you can then choose the lender that is right for you and plan for any future housing costs. Coldwell Banker Premier Realty is here to guide you through these three important steps, which are necessary for becoming a financially responsible home owner…
1) Create a Buyer’s Budget – While different lenders can give you multiple options to choose from in terms of your home loan, it is important to find one that is always looking out for your best interests. It is your responsibility to create a buyer’s budget that covers how much you think you can afford based on all of your monthly expenses. Figuring out your debt-to-income ratio can help you determine your maximum monthly mortgage payment, but do you really want to stretch your budget so far that you cannot afford to live comfortably? Creating a buyer’s budget allows you to better account for all your other costs of living and ultimately leads to making a better financial decision with hopefully a more affordable loan. You may even find that you will be in a better financial position by buying rather than renting, with your mortgage actually cheaper than rent.
2) Choose the Right Lender – First get a good faith estimate from one lender, then you can shop around for the best rates possible. Again, it is your responsibility to get the best deal, as some may offer a better Annual Percentage Rate (APR) while others could have a shorter-term loan available that might be more advantageous depending on your priorities. Regardless, it will definitely pay off in the long run to choose the right lender, who will go through all the details of identifying how much you should be paying for your mortgage based on a percentage of your income and including taxes and insurance so that you do not take on too much debt. This decision is just as important as choosing the right home since it involves a long-term commitment that will impact you for years.
3) Get Preapproved – Working with a qualified financial professional on your home loan is essential to figuring out how much you can pay for your next home. Getting preapproved should come at no cost to you and simply involves a credit check to find out what other responsibilities you currently have that may affect your ability to pay the mortgage. If you are not preapproved to buy or limited in terms of what you might qualify for, renting is another option until you are ready.