The idea of a new home is exciting, especially for first-time buyers. But in order to find a home that will suit you best, it’s important to remember that affordability is a more important feature than walk-in closets and granite counter tops.
Cottonwood Realty recommends that you keep these four factors in mind when determining your home budget:
- Monthly income – According to BankRate, the standard rule for lenders is that “your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes.”
- Monthly expenses and debts – Remember to think about the extra expenses you may incur in a new home, such as higher electricity bills from cooling a larger home or a higher water bill from caring for a big yard.
- Credit score – If you don’t know your credit score, you can request a free copy of your credit report from each of three major credit reporting agencies – Equifax®, Experian®, and TransUnion® – once each year at AnnualCreditReport.com or by calling toll-free: 1-877-322-8228.
- Down payment – The bigger the down payment you can afford, the less money you’ll have to borrow and the smaller your monthly mortgage payments will be, so it’s important to save a sizable down payment before you approach a bank or credit union for a loan.
When you’ve determined your answers to the above, you can plug your income, expenses/debts, credit score and down payment amounts into this handy mortgage calculator from NerdWallet.
Once you decide on a home budget that you’re comfortable with, contact Cottonwood! Agent Monnie Davis is happy to talk to you about finding a Runnels County property that fits your budget and your wish list. Call Monnie at 325.365.6404.