The subprime mortgage bust has alarmed a lot of people away from the housing market.
The nightly news is crammed with images and stories of average Americans who are losing their properties because they made greedy and uneducated decisions. They were taken advantage of by predatory brokers, or a combination of these situations. However, the news isn't all unsavory. This regression in the market has dropped prices and made housing reasonable to many fiscally dependable renters who never considered property ownership to be an option.
If you discover yourself house-hunting, make sure that you go by these five simple steps to take advantage of this downturn in the market; if you don't, you could be the next unhappy story in your local news.
1. Accounting for Extraneous Expenses
As with almost any major purchase, there can be a myriad of fees associated with buying a home. Charges associated with property taxes, homeowner's insurance, standard maintenance, and utilities should not be passed over. In addition, if you buy Ruidoso real estate that is part of a complex or attached to a homeowner's association, you will have to pay annual fees as well. Make sure that you take these other expenses into account when you are defining how much home you can afford.
2. Acknowledging Special Assessments
Many homes require many regularly scheduled special assessments to be performed in order to satisfy local regulations and ordinances. These are costs that are required in addition to standard property taxes. In order to make sure that these costs don't take you by surprise, obtain copies of prior bills for these services and inquire about any pending and future assessments that need to be done on the property.
3. Obtaining a Manageable Mortgage
A good question to ask yourself before contacting your local banker to discuss a loan is, how much is too much? While you might be tempted to try and receive as much money as possible if you can find a good rate, you do not want to make the mistake of taking on a loan so big that your finances will be extended to the point that you cannot make your payments. Traditional income multipliers are a good way to start. If you have a single income, 3.5 times your annual salary is the maximum that you should consider requesting and if you have dual incomes, the maximum would be about 2.75 times your joint salary. If these amounts will stretch your budget too far, then it is a good idea to consider borrowing less.
4. Determining How Much Home to Buy
Now that you have a handle on all of the costs involved and have determined how much money you can make use of, it is time to figure out just what you can afford to spend on a new home. Whatever you do, don't bite off more than you can chew; doing so could quickly lead down the road to foreclosure. Take into account your credit history, the closing costs on the loan, the amount of the down payment, and any preexisting debts. Weigh these against your income and savings before making a move.
5. Welcoming Your New Property into Your Basic Budget
Once you have everything in order, set a budget and stick to it. While your new home purchase will undoubtedly become both your biggest asset and your biggest overhead, you still have to eat. It is also imperative to make sure that you start building a rainy day fund in case of emergencies; one of the things that accompany a new home is the potential for substantial unforeseen expenses. Set a reasonable budget that includes an allowance for unforeseen costs and you can live happily ever after in your new home.
By sticking to these simple rules and knowing the market before you head out there... your next home can become obtainable. We help hundreds in this market buy Ruidoso real estate. When can we help you?