Financial Considerations

Your dream home might seem to be out of reach, but you can start planning right now.

A good credit score is a must to qualify for a mortgage, so pay bills on time, save some money and minimize your debt-to-income ratio (gross monthly income compared to minimum payments on all recurring debts). The lower your debt-to-income ratio is the greater your chances of a loan approval.

Some loan programs come with low down payment options, while a few don’t offer down payment at all. You will require some savings to pay for closing costs, moving expenses and an earnest money deposit on a home.

Don’t empty your entire savings on a property. Always set aside cash reserves for access after buying.

Pre-qualified and Pre-approval

Getting pre-qualified is the first step in the mortgage process. You supply a bank or lender with your overall financial picture, including your debt, income and assets. After evaluating this information, a lender can give you an idea of the size of the mortgage for which you qualify. Pre-qualification can be done over the phone or on the internet, and there is usually no cost involved.

Getting pre-approved is the next step, and it tends to be much more involved.

With pre-approval, you will receive a conditional commitment in writing for an exact loan amount, allowing you to look for a home at or below that price level. This puts you at an advantage when dealing with a potential seller.

Completing both of these steps before you start to look for a home in Buffalo NY, so you know how much you can afford. This will take the guess work out of your home search and will save you from looking at properties that are beyond your means.

Getting per-approved for a mortgage also enables you to move quickly when you find the perfect place. When you make an offer, it won’t be contingent on obtaining financing, which can save you valuable time. In a competitive market, this lets the seller know that your offer is serious, and could prevent you from losing the home to another potential buyer who already has financing arranged.

How much can you afford?

Some lenders suggest that you can afford mortgage payments totaling about 1/3 of your gross income but others suggest closer to 28% for housing related costs including mortgage, insurance and taxes. There are a number of factors including your projected income, interest rates, type of mortgage and the market.  Ask your mortgage broker to help you understand what’s in play.

Becoming a home owner means you have to consider home owner’s insurance, property taxes, and maybe even home owners association dues. In addition, you should think about your plans for the future. Is this your starter home or your forever home?

A lender can tell you how much you can borrow, but that lender won’t know how much you spend on travel, pizza, recreation, or your plans for potentially reducing your work hours when you have a family.

Special Considerations

Some Towns and cities have special loan and tax status exemptions. You may qualify for the NY State Star Program, Veterans exemptions, first time home buyer programs, or special considerations due to your occupation, disability etc

What is the verdict?

Purchasing a home is a lifestyle choice that requires you to think about how you like to spend your time and the type of Western NY community where you want to live.

Buffalo NY is a great place to live. The city of Buffalo and the surrounding suburbs provide both tree-lined avenues with a neighborly ambience as well as Condos and Apartments within walking distance to our many pubs, theaters, and other cultural attractions.

Traffic in Western NY is manageable as compared to larger metro areas like New York City. Housing costs in Buffalo are currently lower than the national average, so home ownership isn’t far-fetched.

Talk to me for a better idea about the home buying process. I can help you find the right lender and guide you through the home buying process using my knowledge and all the tools that Century 21 Winklhofer has to provide for your unique situation. Contact Steven

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