Home Buying Tips

Finding and purchasing a home that will meet your needs now and in the years to come is a significant and often stressful time. Our goal is to make this transition as smooth as possible. Here are some tips that may ease the search of finding your dream home.

Getting Started

Before you start looking for a home you should ask yourself a few questions:

Where do you want to live? Do you want to be close to schools, shopping or work?
What kind of house would you like (need)? Are you looking for a particular style? How many bedrooms and bathrooms do you want? Do you want a yard?
How much house can you afford? Have you consulted a Realtor or mortgage lender to determine the size of the mortgage you would qualify for?

Here are a few tips to help you get organized:

Pull a credit report on yourself and make sure the information is accurate. If you find any errors take steps to correct them immediately.
Browse through real estate advertisements in the newspaper and here on ColdwellBanker.com. This will give you a good feel for the types of homes that are on the market and what they cost.
Visit open houses on the weekend. It doesn't cost anything to look, and looking at a few different homes might give you ideas for things you'd like in a house but haven't considered.
Start saving money - you'll need to have cash on hand for a down payment and closing costs.
Don't incur any additional debt. Pay down your credit cards - and don't apply for any new ones. Don't make any major purchases on credit - buy the furniture or car later.
Contact us to refer you to a Coldwell Banker Sales Associate at one of the offices in your area. Your Realtor can help you determine how much you can afford, and they can provide you with information on homes that may interest you. The Sales Associate will also help you complete all of the necessary forms when it comes time to make an offer.

How much house can you afford?

Simply put, you can afford a house that costs as much as the largest monthly mortgage payment you qualify for.

A quick way to estimate the size of mortgage you qualify for is to take your gross monthly income (that's before taxes and other deductions) and multiply it by .28. This works out to just over 1/4 of your gross income.

Mortgage companies use something called qualifying ratios to determine how much they will lend you. Most mortgage companies use either a 28/36 ratio or a 25/33 ratio. The first number in each pair is the percentage of your gross income that the lender would consider acceptable as a monthly mortgage payment (i.e. if you make $3,000 per month, 28% of that is $840 per month).

The second number in each pair is used when all debt payments are considered, not just the mortgage. (i.e. if you make $3,000 per month, but also have a $250 a month car payment, 36% of $3,000 is $1,080, minus the $250 car payment equals $830).

As you can see, in this example the numbers work out to be almost the same. Obviously if you have more debt you would qualify for less.