Wiseman Real Estate

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HOME BUYING TIPS AND TACTICS Table of Contents Things Not to Do Before Purchasing a Home Debt-to-Income Ratios and Car Payments No Major Purchase of Any Kind How Changing Jobs Affects Buying a Home Reasons to Delay Buying a Home Why Buying a Home is a Good Idea Income Tax Savings Personal Benefits of Home Ownership The Business Cycle and Buying a Home Why You Should Not Wait to Purchase a Home Are You Buying a House or a Home? Why Search For a Realtor? Thinking Ahead About "Buyer’s Remorse" Buying a Home With Resale Value Comparable Sales and Your Offer Price Writing an Offer to Purchase Real Estate How Financing Details Affect Your Offer How FHA and VA Loans Affect Your Offer Service Providers When Buying a Home Buyer’s Remorse - Did You Make a Huge Mistake? Things Not to Do Before Purchasing a Home When you get a raise or accumulate some savings, you may find yourself confronted by an innate instinct of modern civilized men and women. The desire to spend money. It begins simply, by going out to restaurants, then accelerates to purchasing clothing, electronic gadgets, and since North Americans have a special fondness for the automobile, you may even buy a "brand new car." If you're married or ambitious, a few months later your thoughts eventually turn toward buying your own home. Or a move-up home, if you are already a homeowner. Next, you contact a loan officer to get prequalified for a mortgage loan. You state your desired price and how much you can put down. You provide your income and may even supply pay stubs and W2 forms. The loan officer methodically crunches the numbers (by telephone, in person, or even over the internet). "If only you didn't have this car payment..." back to top... Debt-to-Income Ratios and Car Payments You see, when determining your ability to qualify for a mortgage, a lender looks at what is called your "debt-to-income" ratio. A debt-to-income ratio is the percentage of your gross monthly income (before taxes) that you spend on debt. This will include your monthly housing costs, including principal, interest, taxes, insurance, and homeowner’s association fees, if any. It will also include your monthly consumer debt, including credit cards, student loans, installment debt, and…. …car payments. How a New Car Payment Reduces Your Purchase Price For example, suppose you earn $5000 a month and you have a car payment of $400. Using an interest rate of 8.0%, you would qualify for approximately $55,000 less than if you did not have the car payment. Even if you feel you can afford the car payment, mortgage companies approve your mortgage based on their guidelines, not yours. Do not get discouraged, however. You should still take the time to get pre-qualified by a lender. Next, you contact a loan officer to get prequalified for a mortgage loan. You state your desired price and how much you can put down. You provide your income and may even supply pay stubs and W2 forms. The loan officer methodically crunches the numbers (by telephone, in person, or even over the internet). However, if you have not already bought a car, remember one thing. Whenever the thought of buying a car enters your mind, think ahead.

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