Trying to decide if Boston North Shore homes for sale are within your budget? You may have decided that it’s time to stop being a renter and start your journey to becoming a homeowner. If so, good for you! There’s just one thing you should really ask yourself: “Do I have enough to buy a house?”
Prior to launching yourself headlong into the real estate market, make sure you determine how much house you can really afford. The last thing you want to have happen is to lose your home because you couldn’t afford the monthly payments. With that in mind, here are a few tips you should keep in mind, courtesy of experienced real estate agencies such as Boston North Shore Real Estate:
Three Tips to Help Determine if Boston North Shore Homes for Sale are Within Your Budget
Check Your Credit Report
When trying to decide if Boston North Shore homes for sale are within your budget, start with your credit. Your credit report is your best friend when you plan to apply for mortgage pre-approval. Request a free copy of your report and check if everything is in order. This can give you an idea of just how much your bank will approve you for and at what rate, allowing you to create a realistic budget. Immediately report any errors you may find.
Use the “43 Percent Rule”
Under Federal Housing Administration guidelines, lenders often use a 43 percent debt-to-income ratio to help determine if they should approve a mortgage application. It would be wise to adopt this practice to see how much house you can afford. Calculate all of your current debt, monthly expenses paid via credit card, and the future expenses of acquiring homes for sale. That total should not exceed 43% of your monthly income.
Don’t Spend Your Entire Loan
You may have been pre-approved for a $400,000 loan, but that doesn’t mean you should use up the entire amount. Remember: banks want you to max out because it’s better for them in the long run. Shave at least 15 percent off of what the bank has approved you for to give you some wiggle room for your finances.
We have a lot of tips if looking at Boston North Shore homes for sale to help you determine if you can afford any homes you’re considering. We have a lot of mortgage related tips that will help potential homebuyers through the mortgage maze. Check out these and other articles to your right under Boston North Shore Real Estate Categories.