If you are a first-time home buyer in Boston, MA
you must consider how much loan you can afford before you go shopping for that
dream house. Excess debt can affect your ability to own a home or to keep a
home so it's important to know what your financial “wallet” looks like. Before
you go shopping for a mortgage make sure to calculate how much home you can afford.
Debt-to-Income Ratio. A good place to start is with your debt-to-income ratio. Lenders will use this
ratio to see how much you qualify for. You can do a quick calculation yourself
by dividing the total of your fixed expenses - such as rent, car loans, and
credit cards – by your gross monthly income. This isn't a full picture but is a
good starting point. Depending on if your loan is qualified or not your
debt-to-income ratio will have a cap of 43%, meaning your mortgage payment
can't exceed 43% of your monthly income. If you have a high level of debt you
may need to reduce it before you can qualify for the mortgage you want.
What can you afford? Even if you qualify for a
high-dollar mortgage you likely should not borrow the full amount. When you add
in closing costs with the down payment much of your savings can be depleted.
Consider taking on a smaller mortgage, therefore a smaller down payment, so you
can keep some money in the bank for emergencies. A Boston, MA home affordability calculator can help you see
what your mortgage and monthly expenses may look like.
Test out your mortgage in your wallet. Before
taking out a mortgage and officially adding it to your wallet give it a test.
Pretend to make a monthly mortgage payment by setting aside the additional
amount you would pay each month. Live this way for a few months and see if it
leaves you comfortable with your new spending. If the additional payment leaves
you stressed or unable to live within your means than you should scale back
that Boston, MA dream home.
When you are ready to purchase a home in Boston, MA look to an
experienced Boston Real Estate Agent.
I'm committed to providing you with the highest quality buyer service. When
making the type of investment that buying a home requires, you deserve to have
all the latest market information and the very best advice, both of which I can
provide you with. I am always here should you have a question on a Boston, MA neighborhood
such as South End, Fenway, Beacon Hill, or any other.
I hope to speak with you soon!
Lucas Garofalo
Keller Williams Realty
(617) 861-3631
Lucas@LucasBostonHomes.com
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