Homes are very expensive these days. Many don’t make enough money to even be considered for a mortgage, and then you’ve got to consider the running costs of your hypothetical future house on top of that. It’s a hefty price tag you’re going to be coping with for a long time to come, if you do manage to find a good home with a good price, and you’re going to need to prepare for it.
Remember, affording a house of your own is going to be one of the hardest things in your lifetime, but when it comes down to it, it’s not an entirely impossible feat - as long as you’ve got the right ideas and methods on your side! So here’s some things to consider if you’re currently on the property ladder, if you’re tired of renting and want to move on, or if you’re just thinking about your future.
Do you have a chance of owning your own front door? It might be more likely than you think!
To Know Your Monthly Limit
When you’re out to get a mortgage, you’re going to need to pace yourself. You can’t just fork out for any policy on the planet, and you need to be sure you’re using the right service to fund your house search - it’s not just banks and building societies that have a reign over the mortgage world anymore.
Mortgage lenders themselves like to play by rules, and usually, it’s the 36% rule you’ve got to remember. If you’re looking for a large mortgage, you’ve got to be able to afford a certain payment each month - the whole process is explained rather well here, if you want to get into more details on this. And mortgages are in the big money leagues, so you’ve got to be in a good position to afford them. Let’s say, if you can’t pay out more than $1000 per month, there’s a good chance you won’t be in a position to afford a usable mortgage at all.
To Have a Good Credit Score
Credit scores are king in the financial world, seeing as good credit marks you as a reliable and trustworthy person when it comes to money. If you have a good and healthy credit score, anybody you’re asking to lend you money is going to be nonplussed about the ordeal: you can clearly pay them back, on time and with interest if it counts. Which is why many mortgage applications can fall through - you’re earning enough, you’ve got a family to settle down with, but your credit is less than stellar.
Maybe you had debts in the past (and maybe one you’ve paid off a long time ago is still wrongly displayed on your record), and the period of time before they’re cleared off your report hasn’t passed yet. Maybe you’ve had one too many hard searches from employers and credit companies, and they’ve left a bit of a stain on your report too. Maybe you just haven’t had the chance to build any good credit yet - either way, focusing on your score is a big part of what it takes to afford a house.
To Know How the Market Works
The real estate market is huge, and rightly so. There’s a lot of people out there who need homes, and there’s a lot of people who build and sell homes, turning the need for accommodation into a good way to make money. However, the property ladder isn’t just something you can start to climb with no problem. Even just getting your foot on the first rung can be a challenge.
So make sure you’re aware of how the market works. Make sure you can answer questions like: What causes house prices to go up and down? What is the average price of a home in your area? What agency fees are going to need to be paid, and why? And what exactly is equity, and why does it need releasing from properties? Get to know the jargon, get to know why estate agents specifically like to make it confusing, and then you’ll be in a much better place to try and afford a home - you’ll know how to craft your budget, at least.
Affording a house is no small feat, and congrats on you if you’re already in the position to do just that! But make sure you know what it takes before you get into it; you don’t want to waste your money here.
CANDY TAI is a wife to David and mom of 5 with a degree in Communications. She's a native Texan (Hook 'Em Horns!) who's been making her home in the Kansas City metro area for nearly 15 years. She loves being able to shuffle her kids from their various sports activities, piano lessons, and school activities. She enjoys fashion, beauty, reality TV, and moviegoing.