BHHS Verani North Andover

Considering Your Finances: Is Home Ownership the Best Choice?

by Marianne Avila 06/22/2022

Whether you’re planning on buying investment property or a new home, there are financial factors to consider. Knowing the details of your financial situation will help you make the best decision and help avoid unnecessary stress. If you’re trying to decide between renting and buying, here are some of the main financial things to go over:

Savings

Most financial experts advise you to save up to 6 months of emergency savings before you buy a home. Emergency savings are always a good idea to have, but when you’re considering purchasing a home, it becomes especially important. Before making a major investment, make sure you have the means to stay afloat in case something goes wrong.

Down Payments

It’s possible to purchase a home with a tiny down payment, but even the lower percentages are thousands of dollars. The bigger the down payment, the less money you owe to your lender. For this reason, many potential homebuyers opt for a larger down payment both to save on accrued interest and private mortgage insurance.

Debt-to-Income Ratio (DTI)

Most lenders will consider your debt-to-income ratio as part of your qualification for a loan. Luckily, this ratio is simple to calculate yourself. To find your own DTI, divide your monthly expenses—including loan and credit card payments—by your monthly gross income. This will give you a good idea of how you stack up compared to lender requirements.

Credit Score

Higher credit scores typically mean better chances of being approved for a lower interest rate on a mortgage. Your credit score comprises many financial factors. You can improve it by lowering your credit usage and paying your bills on time. While it might not seem important, even a percentage point matters for getting a good interest rate.

The financial part of home ownership can be overwhelming, but as long as you know the important metrics, you will make the best decision for your own situation. Keep these financials in mind to make the best choice.

About the Author
Author

Marianne Avila

Welcome to Marianne Avila and her team at the Real Estate Integrity Group of Berkshire Hathaway Verani. Named Achiever of the Year New England 2021 and Platinum Top Producer is what sets her apart from the rest. We put over 25 years of experience to work for you to make your dreams a reality. Integrity is in our title because we are committed to providing expertise, counsel and advice to the highest degree with honesty, manage negotiations fairly, and provide creative Win/Win solutions. No compromises, no mistakes. We believe that a higher standard for the real estate industry has been set based on this belief system. Marianne has embraced the Team concept and taken it to the next level with a multi-person real estate team. Expect prompt and consistent communication, confirmed appointments, professional standards and a Team of specialists to support the transaction from start to finish and provide creative Win/Win solutions.