Are You Ready To Buy?

A lot of people that are renting a home can actually afford to buy it with the right planning and preparation. In order to figure out if your are financially capable to buy a home, it is a wise idea to have a look at your current income, any savings that you might have, monthly expenses such as food and any debts that you might have (car payments, phone/cell phone bills, education costs). These are extremely important and key factors in determining how much mortgage you can afford as well as how buying a home will impact your budget.

When combining the following four categories together they form a realistic guide that will provide you with a clearer understanding of the financial situation that you are in. All you will need to do is print out the following pages and fill in the blanks for the categories listed in the charts.

1) Review Your Income. If you plan on purchasing a home you should be aware of the fact that buying a home requires a given amount of savings that you will use for the down payment and any closing costs. If you do not have any money saved up then you should look into programs that do not involve large closing costs. Here are a few questions that you should consider or be thinking about:

• On average, what is your monthly income?
• Will your income stay at this level in the near future? If so, then for how long?
• Are you expecting any increases or decreases in income anytime soon?

This is an example of certain income categories that should help you figure out your monthly income.

2) Review Your Savings. Even a bit of savings can really help a lot when you are looking or planning to buy a home. Saving money is always good since there are certain costs that you cannot pay for with your loan. You will need to pay those costs at closing, which is the day that you buy your home. Here are a few questions that you should consider or be thinking about:

• What percentage of your income are you saving?
• Is there any way that you can be saving more money than you are now?

This is an example of certain income categories that should help you figure out your monthly savings.

3) Monthly Expenses May Increase. Purchasing a home is obviously going to impact your monthly expenses and spending habits. You should be aware of whether or not you have trouble saving money now because if you do, your finances might be too tight when you actually buy a home. Here are a few questions that you should consider or be thinking about:

• How will this purchase of a home affect my monthly budget and my ability to save?
• Can I take care of any additional expenses that the purchase of a home will bring as well as can I pay my other bills without falling behind on any of my payments?
• Do I expect to maintain a stable income for the near future?

This chart is an example of expense categories that should help you approximate your monthly expenses. This chart is very useful when it comes to determining your existing monthly expenses and to approximate how these expenses will affect your budget.

4) Review Your Debt Responsibilities. You should always keep in mind how your debt will impact your current income and the decision the lender will make about your mortgage loan amount. You need to look at how these new payments will change your lifestyle and spending habits.Here are a few questions that you should consider or be thinking about:

• How much debt can I manage without falling behind on my payments?
• Am I going to be able to pay all my bills on time during the length of this loan?