So you have finally picked out a good location for buying a new home. That is great! This is of course the first step towards buying the property, although people waste a lot of time in this step alone. For instance, they spend as much as 6 months or years looking for the right property. As a counter argument, it can be said that it does take this much to seek out a suitable property with care and adequate information. Regardless, you do need to find a home before asking for a loan or mortgage. Now, it is important to find out how much you can afford on your own, even before you contact the best mortgage advisor.
Why find that out yourself?
There are two reasons for this. First of all, you do not wish to look at properties that you cannot afford. That shall be a waste of time, at the very least. Besides, if you look at every property that comes your way you can get unrealistic expectations and get loans for homes that you may find later you can’t afford at all. A far better option is to start from the bottom. Start with the properties that are below your budget and price range. Work your way up from there. When you do this, you can appreciate what an extra bit of money can give you.
Secondly, you may want to do your own calculations as a lender tends to tell you to go for more expensive properties. That way, he or she can get more commission. Remember, these may be properties that shall be uncomfortable to pay for in the long run. We’re talking about paying back the mortgage loan of course. As part of the process, the lenders shall be asking you about detailed financial information as you ask for a mortgage. However, most of this shall only be about your debts and income. They may not know or tell you about the things that eat away of your income such as monthly grocery, money spent on gas, childcare, insurance and the like.
How you can calculate your monthly housing payment
There is a way that you can calculate this and even see if it is affordable! There are plenty of online calculators that allow you to do the calculations. Apart from that, if you visit the major online real estate websites and top personal financial websites, you’ll find these there as well. However, one thing to remember is that the calculations you’ll find at these places tend to be very simplistic. For best results, you shall be required to do your own math for getting an affordable scenario.
Here are some steps to help you to find out the properties that you can afford.
1) Find out how much is your net income after tax: This is the first thing that you need to do. Are you going to be contributing to the home income alone? Is there anyone else? If so, you’ll need to find out how much you are bringing home after paying off the taxes. There are of course certain items that you’ll have to pay for every month, even after taxes. Take these into considerations. In case you do have a regular income, it even easier to find out how much you can pay in 12 months.
2) Find out the expenses: Going for a mortgage and looking at income only is not the best way to do this. You’ll have to look at recurring monthly bills as well. This means that there shall be monthly recurring bills to take care of such as groceries, credit card paybacks, electricity bills, phone bills and more. After calculating these expenses, deduct these from your monthly income. Thus, you can find out how much you can save and give for the mortgage.
3) Look for the expenses that you’ll have after owning the home: Owning the property shall not be the last leg of the journey. Even after that, there will be expenses. This can range from homeowner’s fees, association’s fees, maintenance and upkeep.
These are the things that you need to do. If at all you feel that you are not able to do these, or if doing these are difficult, contact the best mortgage advisor in GTA.