- Getting pre-qualified is typically step one for most homebuyers. Pre-qualification involves nothing more than multiplying your gross income by .28 (this rate could change based on a number of things – including your credit scores). So, if your family’s gross income is $50,000 per year, then the amount that you could conceivable spend on a home would be 50,000 x .28 = $14,000. We then divide this number by 12 months and get $1,166. This represents the amount per month that you could spend on the mortgage, taxes, and homeowner’s insurance (PITI). There is also an equation for total debt allowed, but really - why not allow the professionals to do the math for you, visit your local financial institution.
- Always get pre-approved! It’s not enough to get pre-qualified, which doesn’t check your credit history. Getting pre-approved enhances your negotiating position – it shows the potential seller that they are looking at a good buyer. Again, visit your financial institution, and get pre-approved.
- The bottom line is, regardless what dollar amount you are approved to spend, you really need to look at your own budget and decide what you really can live on once the mortgage, taxes and insurance are paid for. You don’t want to buy a house only to be left with barely enough money for cheese noodles – minus the cheese.
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It is not owned and/or operated by any real estate agency.
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E-mail: service@dodgebyowner.com • Phone: (920) 386-2755 • P.O. Box 35, Juneau, WI 53039
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