Things to Think About
When buying your 1st home you need to think about what can I afford? You need to figure out much you are comfortable spending each month. Do you like to dine out a lot or have expansive hobbies? You are buying into a long term financial commitment so take some time to really think what is important to your lifestyle.
Steps to Follow
Then take these few steps to figure out how much you can afford for a home.
1. You need to figure out your gross monthly income as well as your partner’s (if they are going to be on title). This is income from all areas, work, child support, alimony, dividends, property rentals etc.
2. Then you need to figure out your monthly housing cost will be. (A mortgage broker can help you with this). What is considered housing costs? They are your monthly mortgage payment, 1/12th of your property taxes and your monthly heating costs. If you buy a condominium then also include ½ of the monthly maintenance fees. These when added together can not add up to more than 32% of your gross income.
This is called you GDS or your Gross Debt Service.
3. Now figure out your TDS or Total Debt Service which can not total more than 40% of your gross monthly income. These debts include your car loan, stedent or any other loans, visa, line of credit debt, child care expenses etc.
4. Depending on your credit score among other things a mortgage broker can figure out what interest rate you will qualify for.
5.Once you know what interest rate, your GDS and TDS then you can figure out how much mortgage you will pre-approve for.
Help is Here
Does this sound daunting then click here and we will help you through the process, get experts to help and guide you to your 1st home.