A Great Time to Buy

Today’s market is great for homebuyers. If you’ve been thinking about purchasing a home, now is an excellent time to buy.

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If you've been debating purchasing a home, here are three reasons to consider regarding timing:

Current lending rates are historically low and down payment requirements are as low 3.5% for FHA loans. Interest rates aren't just important for the monthly payment amount, but also because when the interest is lower the bulk of your payment is going towards your principal which is your equity and helps pay off the house faster.

The national median home price for November is $221,900 with the average interest rate at 3.79%. If you purchase a home for $221,900 with 3.5% down at the 3.79% interest rate your monthly payment of principal and interest would be $996!

If you aren't ready to purchase yet but are thinking you will in the next year or more, it is a great idea to talk to a lender and see if they have any suggestions of things you can do while you're waiting to help you get the best loan possible. Obviously increasing your income and reducing your debt is good, but credit is so important. You should have a credit card and use it, but never let a balance of more than 30% of your limit sit. If you are self employed or receive commission, typically lenders will need two years history of that to incorporate that income when considering you for a loan. For tips like this and more give me a call and I will set you up with a lender that I trust!

Once you speak with a lender and find out what purchase price you qualify for let me know and we can start looking at what kind of house that number gives you in different areas of Columbus! You can always browse listings on my site sorted by community to give you an idea as well:

This Month in Real Estate October 2015

For a quick snapshot on what is going on in the market check out the video below! To find out how it affects you feel free to contact me to discuss your options at pfjohnson@kw.com

How Much House Can You Afford?

Your lender decides what you can borrow, but you decide what you can afford.

Lenders are careful, but they make qualification decisions based on averages and formulas. They won't understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected - for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.

For conventional loans, banks use a ratio called 28/36 to decide how much borrowers could borrow. An approved housing payment couldn't be more than 28 percent of the buyer's gross monthly income, and his or her total debt load, including car payments, student loans, and credit card payments, couldn't be more than 36 percent.

Housing Payment < 28% gross monthly income | Total Debt < 36% gross monthly income

“For example, an individual with a monthly income of $5,000 who adheres to the 28/36 Rule would be able to spend a maximum of $1,400 on monthly housing expenses, which would include mortgage payments, home insurance, property taxes and other housing-related expenses, such as condo fees. An additional $400 would be available for other debt such as credit card expenses and car loans.”

As home prices have risen, some lenders have responded by stretching these ratios to as high as 50 percent. No matter how expensive your market though, we urge you to think carefully before stretching your budget quite so much.

Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.

There are multiple loan scenarios from type of loan (conventional, FHA, VA), length of loan, down payment, cosigner, etc. that changes the qualification standards and the monthly payments. To find out how much house you can afford contact me so I can put you in touch with a great, trusted lender!