Just about anywhere you go online looking for real estate information will have a handy calculator meant to show you how much you can afford to spend on a new home. While some of these can be very detailed and accurate, many rely solely on your income.
Many of these figure your housing budget at 40% of your annual income, the figure used by most lending institutions.However, you should always figure out for yourself how much you can afford, as it may be more or less than this number depending on a number of other factors in your life. By following a few pointers when adding all this up, you may get a much clearer understanding of your financial situation and hopefully avoid any future issues with your mortgage payment.
The first step is to determine the total amount of your income after taxes, then take out your expenditures. This should include all your monthly household bills including pet expenses, child care, fuel, etc. as well as whatever portion you either set aside or think you may need for unforeseen expenses. If you are currently renting, your monthly rental payment can be added back into your income as you won’t have this expense once you buy the new house. If you currently own a home you’re planning on selling, keep that payment in the equation until it is definitely sold so you will not be in danger of losing either the existing house or a new one.
Whatever is left out of this calculation is your “surplus income.” Surplus should never be used to its limits, especially if you do not have a sizeable emergency savings account, because you never know when your costs may go up or your pay may go down. Ideally, a house payment will be no more than half of this “surplus”, though it’s not always possible to keep it to that low of a percentage. If needed, cut out unnecessary bills such as entertainment, restaurant dining, or anything else that may be discontinued if need be to allow you to purchase the home you want.
Knowing the exact market price you can afford for a home requires knowing the terms of a potential loan. Run a credit report, then discuss your options with a lender to try to get a general idea what percent interest you’ll be paying.Determine whether points are available and whether you plan to purchase any. Finally, discuss what kind of closing costs will be charged to you or added onto your loan. Now you have all the information necessary to place a dollar amount on what you can afford based on the monthly payment you can afford.
A year ago when I had my last child, I sat down analyzed my life and decided it was time to start thinking differently about life. I was tired of the rat race and I wanted to stay home and enjoy my son. I needed to continue to work but I did not want to work out of the house.Was this one of those gender disputes? Maybe! But I wasn’t interested in what others thought. I just knew I was a single parent, a woman, who wanted to work from home on something that was worthwhile to me and be around for those important moments in my children’s lives.The first place I turned was the internet, because it was a huge resource of information and it was easily accessible. I didn’t really know what I was looking for but I started reading real estate reviews. I figured if I was going to stay home and work, then I would start by looking into a field that wasn’t considered “in” for the female gender.After all I enjoyed purchasing my home, so why wouldn’t I enjoy real estate investing, and I wanted something that would eventually allow me to work less, so real estate investing seemed ideal. Unfortunately I didn’t know much about real estate investing, but I wasn’t “dumb” either.I just needed to learn as much as I could about real estate investing before jumping in, so I read real estate review after review.
I came across wikis, and talked about it on twitter. I read, I watched, and I listened. While I was listening and reading, I came across a wiki that mentioned Dean Grazziosiand the real estate success academy. Now, I know there are a lot of online businesses that are frauds, but I had heard a lot of good things about Dean Grazziosi. So after careful consideration, I decided to join the real estate success academy. I wasn´t going to allow any guy to crack a gender joke at my expense, I really wanted to know everything there was to know about real estate investing and becoming a true millionaire. I didn’t want to just dream about being a millionaire, start on some fraud program, end up spending a small fortune and get nowhere.
I was sure the Success Academy was a legitimate business, and one that would help walk me through every real estate investing dream I had. They would show me the “ins and outs,” the type of documents I needed and everything that would keep my transaction profitable.
To date I am not sorry I became a part of the Dean Grazziosi team. It has been one of the best decisions I made and today I am well on my way to becoming that real estatemillionaire I always dreamed of becoming.
Whether you are a real estate wholesaler, rehabber, flipper or landlord, you probably don’t have to be told that selling a property in 2009 is not the piece of cake it was in 2005.Yes, times have definitely changed, and in order to profit from real estate right now, you must create and use a different set of techniques to get the job done.
While it may seem impossible to make real estate millions in a down market, the truth of the matter is that it is not that difficult if you know how to market yourself and your properties creatively.If you specialize in wholesaling real estate, one of the most effective tools you can use to find buyers in today’s market is to create your own VIP buying program.It is a very simple concept.The idea behind this is to make buyers feel special.By giving a club of buyers “insider only deals”, you are able to make them jump when you need them to jump, and this gets your real estate sold.
So how does it work?First of all, you have to decide how a buyer will get on your VIP list.Make it simple, but make it work for you.When someone buys one of your properties, put them on the list.Moreover, make potential buyers want to be on your “A” list.Once someone is on your list, make it a point to contact them whenever you have a new deal and offer them an exclusive pre-market discount.There is almost nothing that will sell real estate better than “insider” discounts and in a down economy, they should be incorporated into as many deals as possible.
Thanks to the Internet everything has become more sedentary—and easy. Perhaps the value of a sedentary lifestyle is an argument for the National Obesity Society to argue (if there is such an organization), but what it means for real estate investors is your job couldn’t be easier thanks to modern technology.
What used to require legwork now can be completed from the comfort of your couch, home office work station, or bedroom. Your commute is only as far away as your keyboard. Thanks to listing sites online, foreclosure sites online and even county records often accessible online you don’t have to leave home to find out any of the information you used to have to chase after in the past. In fact, some investments can be handled more than 90% from your home. If you are interested in operating a finder’s service for other investors you may never have to leave your home at all except to sign the final deal.
Surely, many real estate projects will require some legwork (even if your legwork involves 4 wheels and an engine, you still have to go outside) but even then unless you are doing the construction work on a flip yourself much of the contracting can be done from your workstation at home. Most real estate projects can be handled from beginning to end with a telephone, a computer, and very minimal outside work.
The biggest part of most real estate transactions involves research and that is where the Internet comes in. Everything is online making finding information easy. The next most important real estate investor necessity is networking, connections, market and strategy information and all of that is so much more accessible now than it was in the past. Prior to the Internet and its vast connections new investors often felt alone in a sea of confusion. Thanks to the connecting abilities of the Internet it’s easy to find others who are working toward the same end, have experience to learn from and are eager to share it.
The current housing crisis in the United States is credited, to a large degree, with causing the crippled economy that has resulted in employment shortages and hard times across the nation throughout the last couple of years. In a nation that has historically had a fairly strong economy — with a few notable exceptions — many have wondered what is behind such a serious blow to the nation.
Several years ago the real estate market reached an all-time high in many areas of the country. Lenders and borrowers everywhere were taking advantage of low interest rates which offered prime conditions for new building. All classes of housing went up significantly in price and investors had a field day. However, though the price went way up on the average family home, the average family income stayed the same.
An overpowering desire for home ownership and the allure of extremely low interest rates compelled homebuyers to purchase homes anyway. After all, that starter home or “dream home” in their sites was only a little beyond their means. Unfortunately, many of those extremely low interest rates came in the form of variable-rate mortgages. People who had stretched themselves just a little thin with the house payments discovered that, with just a little adjustment of the interest rate, they could no longer afford their home.
As the economy headed into rough waters, people in nearly every career field began losing their jobs. Those who were barely making ends meet due to buying too much house for their means suddenly had no income at all. Banks became overburdened with foreclosures, prices on houses in many areas dropped, but fewer and fewer people are able to even consider purchasing a new home. An economy’s health relies on a robust trade, especially in big-ticket items such as real estate, so the housing crisis and poor economy have, in effect, perpetuated each other.
Numerous factors in today’s economy have added to the crisis until citizens and legislators can see no way out of the hole. While several legislative measures have been passed, many believe that it is either too little, too late or that such measures are quite misguided. However, despite the current challenges, the savvy investor can still find opportunities in most real estate markets with a bit of knowledge regarding what is required in each area.
