When buying a new home, there are many financial aspects you must consider. It is important that you do so, that way you can ensure that you will be economically sound for the years to come. Today, we’ll look at the things to consider when creating your new home budget.
How Much do you Have in Savings?
When buying a new home, the more you have available to put on a down payment, the more affordable your monthly mortgage payments will be. Many lenders want you to have 20% or more available as a down payment on your new home. When new home buyers don’t have a large enough down payment for a home, they are often required to purchase a form of mortgage insurance. This protects the lender against losses in the event of a failure to pay back on the mortgage. This will also increase your monthly costs.
How is your Credit History?
Since a mortgage is a loan, money borrowed to you by a financial lender, your credit history will play a big part in the amount you are able to be financed. Prior to making any large financial purchases, it is important to familiarize yourself with your credit score. If you are married and one of you doesn’t have the best credit, this again may require you to take out mortgage insurance on your new home.
What is Your Monthly Income?
When figuring out what type of mortgage you can afford, a lending institution will look at your monthly income. They will also take any other expenses you are obligated to pay into consideration. Banks want reassurance that you are able to afford your monthly mortgage payments. To figure out how much you are able to afford, calculate your total financial revenue from employment or investments. Then deduct your monthly expenses. This will be able to give you an idea of what you can afford monthly on a home mortgage payment.
Consider the Interest Rate
Depending on the market at the time you’re considering to buy a new home, you’ll want to consider the interest rate on your home mortgage. Certain times are better to buy than others, especially when interest rates are considerably lower. That’s because in the long run, you’ll be paying less at a lower interest rate.
If you are in the market for a new home in the Encinitas area, I’d be glad to help you find a home that suits your desires. Feel free to give me a call or write me an email. I’ll be able to show options for new homes in Encinitas, California as well as Carlsbad. I look forward to hearing from you.