Planning on buying a home in Southern California or elsewhere in the United States?
Like most buyers, you probably want to know how much money you should be saving to buy a home because every home buyer should expect to pay a down payment and closing costs.
Although we are not Certified Public Accountants, personally, our team has purchased enough properties across Southern California and coached many buyers on how to successfully purchase properties.
Based on our years of experience there are two things we’ve found that all buyers need to look at before buying a home.
#1 – Debt Pay Off
If you’re getting a mortgage of any kind (financing) you may have to pay off some debt because your FICO score will go up when you pay off more debt and you will also be able to get a better interest rate as well.
#2 – Down Payment and Closing Costs
Regardless if you’re buying a home for your primary residence, or an investment property, you will have to pay a down payment which could range from 3.5% (if you’re using an FHA loan) or up to 20% if you’re using a conventional mortgage loan.
Closing costs can range from 2 to 5 percent of the homes purchase price so you should expect to pay up to $7,000 in closing costs for the home that you want to purchase.
Once you get pre-approved by a mortgage lender they will tell you the exact mortgage loan amount you qualify for based on your current credit score and debt-to-income ratio.
As of 2017 most lenders recommend that a borrower’s debt-to-income ratio not exceed 43% because anything higher than this may mean that the borrower may have a difficult time paying their mortgage on a monthly basis.
After telling you what you currently qualify for, your mortgage lender will also show you what your FICO score could be, and how much of a mortgage loan you could qualify for if you were to pay off certain debts that you may have.
The Key to Success Before Buying a Home
As Real Estate professionals we can’t tell you how many of your debts to pay off, or how much you need to save because after meeting with a mortgage professional you should have a clear plan laid out for you which will ultimately help you to buy a home.
The most important thing though that we encourage you to do is live a “frugal lifestyle” so you can save as much money as quickly as possible.
This may be hard for some buyers to do, especially thanks to today’s modern lifestyle which includes so many additional charges that we pay for on a monthly basis like Satellite Television, Internet, and Mobile phone plans, but the reality is that if you keep your goal in front of you at all times it will only get easier to cut your expenses and save money for buying a home.
To learn more about how much money you should be saving to buy a home, or to view homes for sale in Southern California, contact Fred Seed Realty today by calling us at (800) 921-9231 or connect with us through our website.