Just Before You Look at Homes for Sale, You Should Know How Much You Can Manage to Pay
Prior to getting in touch with a realtor and begin looking at properties for sale, there are a couple of things you have to do. Your real estate agent will help you in finding out how much home price you are able to afford, but your real estate broker needs information from you to accomplish it. So, be ready with your financial information to your initial engagement with your real estate agent to begin viewing homes for sale immediately.
To determine a home for sale cost you can afford, you have to review your financial situation in order to check how much money down you can afford and how large of a monthly payment you can comfortably handle.
Net Worth
Thus, before looking at homes for sale, get together a statement of your net worth. Begin by performing an inventory of all of your assets (things you own that can be sold for hard cash). This includes all investments, savings accounts, home furnishings, your current home and any other real property, automobiles, recreational vehicles and equipment, furs and jewelry, guns, electronic equipment, loans that are owed to you, any vested equity you possess, cash and surrender values of insurance plans, collectibles, and precious metals and gemstones.
Now, identify the value of each and every asset. This is the amount you think you can sell each item for money within a certain time. Deduct any amount that is owed on the item from the sell price. For example, you could be able to sell your current house for $150,000, but you owe the mortgage company $75,000 (pay-off amount) and another $3,000 in property taxes that would come payable before it can be put on the market.
Then, write down all of your liabilities. These are anyone to whom you owe money for any reason. They include mortgages, loans and credit lines of any kind (which include credit cards), and even your Uncle Bob that lent you $1,500 the previous autumn.
Total your assets and liabilities. Next, subtract the liabilities from your assets to determine your net worth.
Down Payment
To figure out your possible down payment for a home for sale, take your net worth and take off these: the money you have set aside for emergencies, education and retirement; settlement and moving costs of acquiring the home for sale; and cash you will require in order to fix, embellish and furnish the brand new home for sale. The remaining amount is your possible down payment.
Monthly Payment
Next, compute your possible monthly payment that you can afford for your home for sale. List down all your actual and estimated monthly expenditures. Include all monthly costs of your liabilities you’ve identified above, adding the following items: insurance policy premiums, all of your family expenses (these include cell phones and Internet costs), any taxes you owe but not already withheld by your employer, all of your transport costs (these include maintenance, gas, and DMV license), clothing costs (brand new and maintenance), pocket money for family members, food, personal grooming, recreation and entertainment, checkup and dental costs, charitable donations, special expenses (such as school fees), and variable costs. Split into monthly costs any expenses that you pay every quarter or yearly.
Next, total your monthly expenses. Take off your monthly mortgage or rental costs. Subtract the remaining expenses from your total monthly household income. This is how much you can comfortably pay for a monthly mortgage payment on a home for sale.
If the monthly payment for a home for sale appears a little on the low side, reexamine all your monthly expenses. Where could you lower or do away with spendings? For instance, paying off your high-interest rate credit cards in order to get rid of the high monthly payments.
Once you have this info in hand, your real estate agent can find out exactly how much you can afford to pay for a home for sale.