Why should I consider buying below my budget?
It’s wise to purchase a home below your budget, because you’ll have more money left over each month for savings or other expenses.
It’s wise to purchase a home below your budget, because you’ll have more money left over each month for savings or other expenses.
As a general rule of thumb, you should always have 3 months’ worth of living expenses on hand, including mortgage, in the event of an unexpected circumstance.
It’s also advised to consider other home-buying expenses such as closing costs.
If you make a down payment of at least 20% of your home’s purchase price, you won’t need to pay PMI.
Depending on the mortgage, down payments lower than 20% are acceptable, and can go as low as 3% in some cases, but you’ll have to pay PMI in addition to your mortgage.
The following will help your chances of getting a lower interest rate:
– Good credit score
– Strong employment history (at least 2 years of work with no gaps)
– As much savings as possible for a down payment. If you make a down payment of at least 20% of your home’s value, you won’t need to pay PMI.
– Consider different types of mortgages. For example, if you can afford higher monthly payments, a 15-year fixed mortgage term will have lower interest rates.
– Shop different lenders to compare rates
When gauging home affordability, consider the following factors:
– Credit
– Monthly income
– Your available funds for a down payment and closing costs
– Your monthly debts and expenses