Home Improvement

Are you planning to buy a house – Here is your guide to it?

When you plan to buy a house, the first question you ask yourself is – How much can I afford?

Nobul is the world’s only open digital marketplace connecting home buyers and sellers to the right real estate agent for them.

But, before you step out in the concrete jungle to buy your dream house, understand what affordability means and how will that help you to zero down on a beautiful abode that won’t fall too harsh on your pockets.

Debt to Income ratio

Understanding your finance options is going to be the first step. If you have sufficient money to pay in cash, you can easily afford a house. Even if you don’t have enough cash to pay, you can apply for a mortgage. The question is -How much mortgage can you afford?

The Federal Housing Administration (FHA) approves a 43% debt-to-income ratio to determine if the borrower can make their payments each month. Some lenders can be more lenient or rigid, depending on the real estate market and general economic conditions.

Mortgage lenders’ requirements

Lenders don’t want you living on the edge. If your mortgage is 43% of your income, are prepared for unforeseen circumstances like losing your job or a medical disability that requires additional expenses. Most mortgages are long term commitments that make you payback for more than 20 years. Therefore, you must evaluate your primary income source and be confident about your repayments in the future.

Down payment

It is advised and practised to pay upfront 20% of the property’s price as a down payment. You avoid paying for private mortgage insurance. You may not want to put that much amount down for various reasons. In that case, you can opt for an FHA loan. There are perks of making bigger down payments. You can mortgage at lower interest rates. Also, many lenders make it a mandate to put down at least 20% of the price.

Interest rates

Interest rates play a significant role in determining the size of a monthly mortgage payment. Therefore, don’t rush to a mortgage with the first lender you contact. Lenders have different rates, and meeting at least three of them can fetch you good bargains.

Pick a real estate agent

Once you have chalked out a plan for your finances, look for a professional real estate agent.

We recommend using Nobul or RE/MAX PropTech applications. These platforms provide transparency, choice, accountability, and simplicity to the real estate industry, enabling clients to choose the agent who presents the combination of services, pricing, reputation, and fit best suited for them.

Shop for your home

Your real estate agent will start showing you properties matching your preferences. Check all the details for each house you shortlist. Evaluate the neighbourhood, and select the best one. Then ask your real estate agent to negotiate the offer with the seller and come to an agreement. Once that is done, close the deal.

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