Are You Ready to Buy a House? You’ll need to consider more than just finances
If you feel like you’re ready to buy a house, the first question you’re likely to ask yourself is “how much can I afford?” Answering that question means taking a look at a number of factors.
KEY TAKEAWAYS
- Determining your debt-to-income ratio (DTI)—more specifically, the front-end DTI—is an important factor in getting a mortgage.
- Beyond the property’s price tag, a host of other financial and lifestyle considerations should figure into your calculations as to whether you can afford to buy a house.
- You should also evaluate the local real estate market, the economic outlook, and the implications of how long you want to stay put.
- You’ll also need to consider your lifestyle needs, present, and future.
Understand Your Debt-to-Income Ratio First
Are You Ready to Buy a House?
The first and most obvious decision point involves money. If you have sufficient means to purchase a house for cash, then you certainly can afford to buy one now. Even if you can’t pay in cash, most experts would agree that you can afford the purchase if you can qualify for a mortgage on a new home. But how much mortgage can you afford? The 43% debt-to-income (DTI) ratio standard is generally used by the Federal Housing Administration (FHA) as a guideline for approving mortgages.
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