With the average price house in Sonoma County being $640,000 many probably would want to purchase a house however wanting to purchase a house and being able to do it are two different things. Following things should be considered if you want to buy a house successfully…
The most important thing is can you afford the mortgage payment? Is your income rising, remaining stable, or is it going to decrease over the course of the next few years? If your income is going to rise or remain stable that’s a healthy platform.
What are other monthly payments do you carry such as car loans, student loans, credit card payments? How will you manage paying those back while carrying a mortgage payment? What percentage of your monthly income will be going to be going towards other monthly obligations? If more of your income is going towards debt than savings that’s an issue. Which means putting off the house purchase paying off other debt or buying a less expensive house or putting more money down.
Remember for every dollar of monthly debt it requires $2 of income needed to offset it so for example a $500 car payment requires $1,000 a month in income to offset it. If you’re looking at taking on a mortgage payment for example and your total monthly payment is $1,800 per month and you don’t have any other debt at all you’ll need $3,600 a month of income to offset $1,800 per month mortgage payment.
How is your credit score? This one can be a double-edged sword for many because some people who think they have good credit don’t have good credit and people who think they have poor credit sometimes end up having good credit. To get a mortgage with acceptable terms you’re going to need at least a 580-credit score in some cases lower depending on which mortgage company you hire for home financing.
The number one reason why people don’t get mortgage loans today number one thing above and beyond anything else is debt to income e.g. taking on too much mortgage payment in relationship to their monthly income. As a byproduct of that the next thing that the biggest challenge for buying houses is income income to offset the proposed debt and current monthly debt followed by the cash to close.
If you’re looking to buy a house and are looking to do it in a safe and prudent way. Seek the advice of an experienced mortgage lender willing to work with you to make your financial situation work. If your home buying plan is on the longer-term horizon say 10 years or longer. and you can afford that mortgage payment above and beyond anything else it may make sense to purchase a house on a fixed rate mortgage since affordability is number one which would allow you to weather the inevitable financial cycles that occur.
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