Your lender decides what you can borrow but you decide what you can afford. Lenders are careful and they make qualification decisions based on averages and formulas. They won't understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected - for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.
Historically, banks use a ratio called 28/36 to decide how much borrowers could borrow. An approved housing payment couldn't be more than 28 percent of the buyer's gross monthly income and his or her total debt load. You might be wondering what qualifies toward your debt load. Debt load includes things such as car payments, student loans, and credit card payments. These things couldn't be more than 36% total. However, as home prices have risen some lenders have responded by stretching these ratios as high as 50 percent. No matter how expensive your market though, we urge you to think carefully before stretching your budget quite so much.
Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.
To find your dream home, we encourage you to use our website. In addition to being FREE, you can set up a custom search, monitor “hot properties” for price reductions, and set up text alerts. Our website is one of the best property listing sites in Elk River. It has our team’s listings plus Keller Williams Realty listings in Elk River and ALL MLS homes for sale, not only in Elk River, but surrounding cities like Otsego, Ramsey, Rogers and the entire state.
1. Decide to Buy: Although there are many good reasons for you to buy a home, wealth building ranks among the top of the list. We call home ownership the best “accidental investment” most people ever make. We believe when it is done right, home ownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home such as equity buildup, value appreciation, and tax benefits stand out.
2. Hire Your Agent :The typical real estate transaction involves at least two dozen separate individuals-insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer's agents, seller's agents, bankers, title researchers, and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.
3.Secure Financing: While you may find the thought of home ownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment. From start to finish there is a six step process to securing the financing for your first home.
The six step process goes as follows:
• Choose a loan officer (or mortgage specialist).
• Make a loan application and get preapproved.
• Determine what you want to pay and select a loan option.
• Submit to the lender an accepted purchase offer contract.
• Get an appraisal and title commitment.
• Obtain funding at closing.
4. Find Your Home: You may think that shopping for homes starts with jumping in the car and driving all over town. And it's true that hopping in the car to go look is probably the most exciting part of the home-buying process. However, driving around is fun for only so long-if weeks go by without finding what you're looking for, the fun can fade pretty fast. That's why we say that looking for your home begins with carefully assessing your values, wants, and needs, both for the short and long terms.
5. Make An Offer: When searching for your dream home, you were just that-a dreamer. Now that you're writing an offer, you need to be a businessperson. You need to approach this process with a cool head and a realistic perspective of your market. The three basic components of an offer are price, terms, and contingencies
6. Perform Due Diligence: Unlike most major purchases, once you buy a home, you can't return it if something breaks or doesn't quite work like it's supposed to. That's why home owner's insurance and property inspections are so important.
7. Close: The final stage of the home buying process is the lender's confirmation of the home's value and legal statue, and your continued credit-worthiness. This entails a survey, appraisal, title search, and a final check of your credit and finance. Your agent will keep you posted on how each if progressing, but your work is pretty much done.
8. Protect Your Investment: Throughout the course of your home-buying experience, you've probably spent a lot of time with your real estate agent and you've gotten to know each other fairly well. There's no reason to throw all that trust and rapport out the window just because the deal has closed. In fact, your agent wants you to keep in touch.