BUYING A HOME

When considering the purchase of a home, there are several factors to consider. As with many other decisions in your lifetime, there are advantages and disadvantages to buying a home.

• Take time to consider all the factors

• Payments stay relatively the same depending upon the form of financing

• Tax credits

• Control over interior and exterior within stated city, subdivision, or association ordinances

• More storage space

• Savings in home equity as market value increases

• Improved credit rating

• Usually no restrictions regarding pets or number of occupants

• More privacy

The Disadvantages

• Less freedom to move

• Property taxes may increase to a rate that makes the home no longer affordable

• Money spent on home improvement projects

• Responsible for upkeep of the property (lawn maintenance, painting, snow removal, etc.)

• Neighborhood (or condo) association may require fees for general upkeep of common areas

HOW MUCH CAN YOU AFFORD?

In determining how much to spend on housing, carefully calculate the home budget and current financial obligations. There are up-front costs (down payments, closing costs, moving expenses, inspection fees, etc.) and ongoing costs (utilities, maintenance) to consider when calculating how much you can afford.

A general rule of thumb commonly used in real estate determines an affordable home is 2-1/2 times the total gross annual salary of the potential buyer(s). The buying power also depends on how much is available for a down payment. Lenders will generally follow these guidelines:

• The monthly housing costs plus any long-term debts should not exceed more than 36% of the monthly gross income

• The monthly housing costs (mortgage payment, property taxes, insurance, condo or cooperative fee, if applicable) should not total more than 28% of the monthly gross income