Buying in Rio Rancho or Albuquerque
If you have been considering a home purchase in Albuquerque, New Mexico, now might be the perfect time to make the big decision. Why? Well, because of recent dips in the real estate market, many people can qualify for monthly payments that are equal to or less than what they already pay for rent. While additional costs associated with home ownership may not always provide you with instant savings, imagine how far ahead you could get if you didn’t have constant rent increases for the next 15-30 years!
When you purchase a home using a fixed rate mortgage, you are effectively capping your monthly house payment and that won’t increase unless you renegotiate your financing. (If your property taxes are paid through your lender, you payment may increase or decrease according to the taxable value or rate of taxes charged by the city or county.)
So, if you do purchase a home, how much money should you spend?
Most financial experts suggest that you can probably afford a home that is three times your annual income. That number presumes that you have a debt load that is equal to or less than the average person in your income. In general, the more you owe outside your mortgage, the less you will want to finance on a home. You should check with your lender to see what kind of debt load they will allow buyers to bring into a mortgage.
So how can you calculate your potential payment on a home? There are a number of great websites that will allow you to estimate your payment. Bankrate.com has a great tool to help you get a handle on costs. (Remember, your actual payment may vary due to specifics of your purchase.) Once you get an idea of your payment, you can adjust your goals on the purchase price of a home.
Because of the recent housing slump, banks and mortgage lenders tend to be stricter regarding your down payment than they were prior to 2008. Be prepared to put 5-20 percent down on the purchase of your home. Creative financing options still exist, but use caution to understand all of the potential costs involved in any loan that might seem too good to be true. Your real estate agent can help you sort through many of the options or you can consult a financial adviser to ensure that you are getting a clear picture of what your housing purchase will mean to your financial future.
What else should you consider?
Well, there will likely be closing costs that range from one to eight percent of the purchase price. These may need to be paid in cash or you might be able to include them in your mortgage depending on your financial history and lender policies.
Imagine what it would be like if your rent payment was enough to cover the monthly payment on a mortgage for a comparable property. Often it is. By carefully researching your options, you might be able to purchase a home in Albuquerque and keep your monthly housing costs at 2012 levels for years to come!
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