THE MORTGAGE PAYMENT AND OTHER COSTS OF HOMEOWNERSHIP

We will be going over in detail what a mortgage is and what you can afford and expect to pay in our homebuyer series I and II..  You will find some of this material will be repeated as repetition is all part of the learning process.  We will also go over the other costs you should expect when buying a home.

HOW MUCH CAN YOU PAY FOR A HOUSE?
You may have heard of the 4 C’s of credit, this is what lenders consider when extending credit to you.  They are Capital, the amount of money you have available for your down payment and for the settlement costs. Collateral, the house you are buying will be the collateral, or security for the loan.  The Lender looks carefully at the value and condition of the property and they determine the value by getting an appraisal. Capacity refers to your ability to make monthly loan payments and also pay all your other obligations too.  Credit History is probably the most important.  Lenders want to know how much money you owe, how often you use credit and if you pay your bills on time.  We get the most of this credit history from a credit report.  Check out this article, "Your Credit Score" handout, that goes over  what it means to you as a prospective homebuyer to have a good credit rating.

We will teach you how to read your credit report and offer letters and examples on how to dispute any items.  We want to make sure you have the Edge in your homebuying process.

HOW MUCH YOU CAN AFFORD?
If you are curious about how much you can afford, here is a quick rule of thumb:

Most people who have good credit and a steady income and do not owe a lot of money can afford to buy a home that costs two-and-a-half to three times their annual income.  But if you not sure we have a worksheet that walks you thru your personal affordability.  We will cover how to determine how much you can afford in our classes.  We also go over all types of income we can use – could be retirement, commissions and bonuses just to name a few.

I always ask my clients” where do you feel comfortable” with your monthly budget on a house payment.  Sometimes the lender will approve you for a higher amount than you may want to go. . . so make sure you are working within your budget.