Purchasing Power

Getting swept up in a romantic vision about life in your dream home is tempting. But before you start mentally decorating, tidy up your financial house. Talking about money is never easy, but AtlantaBen is here to provide a levelheaded assessment of your purchasing power so you won’t get over your head in debt.

Your lender decides what you can borrow, but you decide what you can afford. Traditional lending programs will cap housing payments at 28 percent of the buyer’s gross monthly income. The borrower’s total debt load, including the new house payment, car payments, student loans, and credit card payments, can’t be more than 36 percent of your gross monthly income under these tradition lending programs.

Some loan programs will stretch these ratios to as high as 57 percent. If you’re approved for an expensive house payment, you need to take an honest look at your finances and decide whether you really can afford your mortgage payment and maintain your lifestyle. Don’t become house poor. You’ll regret it during Atlanta’s many spring and summer festivals.

Follow AtlantaBen’s simple two-step approach to understand your purchasing power:

Evaluate your budget: Know what you want to spend for a down payment and closing costs and stick to it. Down payments can range from $500 to 20 percent or more of the purchase price. Closing costs are typically 2.5 to 5 percent of your final loan amount.

With a new home comes new bills. Know how much heating and cooling your new home will cost. Ask about maintenance fees. Look at past property tax bills. Call your insurance company for a quote on homeowner’s insurance.

Get pre-approved: Go ahead and clear this hurdle early. There’s nothing worse than seeing a great home slip away because you weren’t pre-approved for a home loan. Get a mortgage pre-approval by talking with your lender or bank. AtlantaBen has several trusted lenders that we work with. Contact us for a recommendation.

“Ben Helped us find our first home in Inman Park in 2013 and we could not be happier with the results. Ben provides extensive knowledge of the intown market, is extremely truthful and comments on additional costs that may apply to a particular house for numerous reasons including repairs and maintenance needs, and all around extremely professional. Ben made us feel extremely comfortable with our decision and the process. We would recommend to anyone who needs a house in the area.”

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