It’s always exciting to buy a new Flower Mound home, but you shouldn’t jump into it blindly. Today, homes are more affordable than they have been for years, and many renters are choosing to buy a home rather than paying an exorbitant amount of rent each month for a small apartment. However, there are some things you should consider – and it’s important to know that you are really ready to make the leap of buying a home in Lantana, Keller, or any of the surrounding communities.
Here are a few questions you should ask yourself to determine if you’re ready to buy a home:
Have you analyzed your budget? It’s essential that you know exactly how much your budget will allow you to spend on a home. Keep in mind a larger home will likely mean higher property taxes, increased utility bills, etc.
How long do you intend to live in the home you buy? Five to seven years makes it financially worthwhile if you do not intend to remain in the home.
What do lenders care about most when applying for a mortgage? Three of the criteria lenders look at the closest include your credit score, income, and down payment.
Other factors that you should consider before you determine you are ready to purchase a home include:
How much of your monthly gross income your recurring monthly payments add up to. How much do you pay each month for car loans, credit cards, student loans, etc.? All recurring monthly payments (including your mortgage) should not be more than about 36% of your gross income for the month. So, for example if your gross monthly income is $6,000, your recurring debts should not exceed about $2,100 or $2,200.
How much will you need for a down payment, and what will closing costs be? These are other expenses you will need to think about. Minimum down payment amounts required vary. For instance, an FHA loan requires 3.5% down, but also a mortgage-insurance premium upfront, which is frequently rolled into the loan amount. You will likely have to pay PMI (private mortgage insurance) to protect your lender should you default if you pay less than 20% down. Closing costs are generally 3% to 6% of the home’s full purchase price, but sellers may cover at least a portion of this cost.
As you can see, there is much to consider before buying a home. However, by being well-prepared and getting the full picture, you can enjoy a beautiful home that you can actually afford, alleviating financial burdens that can cause money issues and stress.
Team Nelson is your one-stop shop for buyers and sellers! If you’re thinking about purchasing a home in the north Texas area, contact our trusted Flower Mound real estate professionals today.