Peter & Sonia Skowronski
Your Las Cruces Professionals at EXIT Realty Horiz

Can you afford to own a home?

Can You Afford To Own A Home?

In order to buy a home, you must either have money saved, or you must be able to borrow money to purchase your house. Most people need to borrow money to buy a home, in which case you must be “mortgage eligible.” Being mortgage eligible means that you qualify to borrow enough money to purchase a home. How you answer the following questions will help you determine if you are mortgage eligible:

Do You Have a Steady Income?

Documented income from a minimum of two years of employment is required for a mortgage loan. If you receive assistance such as social security, it must have a documented two-year history and projected two-year future, similar to a job.

Income may include:

  • Salary or wage from a job
  • Social security benefits
  • Survivor benefits for children under 18
  • Money from a trust account
  • Documented child support
  • Net profits from a business, self-employment

Income does not include reimbursable items such as:

  • Food stamps
  • Unemployment benefits
  • Cash labor (undocumented)

Lenders will sometimes consider “compensating factors” that may offset certain aspects of your situation that may be weaker than what is typically preferred. Compensating factors can include:

  • Amount of time at current place of employment and projected duration of employment with current employer
  • Part-time job that cannot be used as qualifying income
  • Child support income
  • Large down payment
  • Current cost of housing is more than projected mortgage payment

Do You Have Savings for Down Payment and Closing Costs?

Typically, it is necessary to have a minimum of 3.5-5.0 percent of the home price available for down payment and closing costs. Making regular deposits to a savings account is a good way to save for these costs. If you are within certain income limits, there are down payment and closing cost assistance programs that could help you buy a house with just $500 of your own money. Contact us to learn more.

Examining Your Debt

While you may have determined that you are financially stable, you must examine your debt before you can take on the financial burden of owning a home. Can you truly afford a home, or will your debt prevent you from being able to comfortably make monthly mortgage payments? In this case, debt refers to those bills or outstanding balances that accrue interest. This includes items such as:

  • Car payments
  • Student loans
  • Credit card bills
  • Other installment loans such as a title loans
  • Personal loans

Debt does not include expense items such as rent, utility bills, telephone, etc.

Move to Step 3 of the home buying process

Click here to find out what price home you can afford and how much your payments will be.

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