Thank you for giving us the opportunity to help you in your home purchase needs. Our goal is to provide our home buyers a world class service focus on finding their perfect home, at the best price, within the right amount of time, with the least amount of problems.
Buying a home is a big decision. The financial and emotional stakes are high, but the rewards can make it all worth it. The material within FirmRE can help you prepare to start your home-buying journey.
FirmRE REALTORS© are available to help you get started.
Knowing how much you can afford to pay is a crucial step in your search. Nailing down your budget early will make the overall process more focused and less stressful.
Here’s a good way to figure out how much you can afford:
The 28/36 Rule
The 28/36 rule is an established benchmark used by many lenders to determine how much credit to offer you. Here’s how it works:
The “28” refers to the notion that no more than 28 percent of your gross monthly household income should go toward housing costs, which include mortgage principal, interest, taxes and insurance.
To calculate, simply multiply your gross monthly income (amount before taxes) by .28. Use this amount as a guide for how much house you can afford.
Example: You earn an annual salary of $70,000. Divide 70,000 by 12, giving you a monthly gross income of $5,833. Multiply that by .28, and you’ll find you should spend no more than $1,633 each month on total housing costs.
The “36” part of the 28/36 rule refers to your overall debt, which shouldn’t exceed 36 percent of your income. This is important to consider because other high monthly debt loads – such as car and credit card payments – impact the amount you can afford to spend on housing.
For first-time home buyers, the tricky part is knowing how much to budget for taxes and insurance. An experienced real estate professional can assist you with this.
Plain and simple, owning a home can improve your quality of life, provide stability and give you a sense of control you just can’t get from renting. You have a place to live when you rent, but buying is something much deeper – and better.
Your monthly mortgage payment creates equity for you, not your landlord.
The interest on your mortgage is a tax deduction:
While this isn’t a reason in itself to buy a home, it’s nice to get a break at tax time.
Fixed monthly housing payment:
If you opt for a fixed-rate mortgage, the monthly rate of your mortgage won’t change for the length of the term.
When it’s time to sell your home, you don’t pay taxes on the proceeds of the sale that are above what you paid (with some restrictions – see information on capital gains).
A real estate transaction is a complex process involving stacks of paperwork and a number of outside service providers and contractors.
An experienced buyer’s agent can guide you through the process, answering your questions and serving as your advocate (see the Anatomy of a Home Purchase). Your agent will help you find the property that fits your needs, submit offers and counteroffers, suggest a good property inspector and other professionals, and provide all sorts of relevant advice.
With a buyer’s agent, you’ll have someone on your side, looking out for your interests every step of the way.
What are the costs involved in hiring a buyer’s agent?
As a buyer, you don’t pay your agent directly. Instead, the agent receives an agreed-upon portion of the listing agent’s sales commission (usually about half), which is paid by the seller.