Financial Security

A good rule of thumb is to figure that your entire house payment, which includes the principal, interest, taxes, and insurance, should run between 28% to 30% of your actual net income. That way, you should have plenty of money left to spend on your other needs—including home maintenance costs and utility bills.

In fact, the ancillary costs associated with home ownership will probably run you double your monthly mortgage payment. This is a cost that renters often fail to consider when they make the decision to buy a home. However, before you make an offer, you should carefully consider whether you can afford all the costs that a home of your own entails.

Another way to calculate the costs is to figure that you should not buy a house greater than 2 ½ times your current income. Do not, under any circumstances, borrow money based upon income that you hope to make. Reality may not meet your expectation, and you could suffer painful financial consequences as a result. In fact, buying a house when you’re not ready is considered the top financial stressor in many marriages.

Shopping for a Mortgage Loan

When you are shopping for a loan, it is a good idea to interview a couple of different lenders in order to find the one that is most likely to give you a great deal. If you feel as if the lender is not being upfront with you, or you find it difficult to understand what he or she is trying to communicate, move on.

Of course, interest rate is a primary consideration when shopping for a loan. But there are other cost factors involved as well. Be sure that you know all the fees that are connected with a loan before becoming pre-approved. That way, you’ll have a clear understanding of your financial burden before you sign on the dotted line.