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Five Tips For Estimating How Much You Can Afford For A New Home



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In beautiful Chula Vista, homes fitting nearly every taste are available on the market. As such, it’s easy to get carried away with dreams of making your first real estate purchase in the most desirable neighborhoods. Before you go any further, however, you will need to make a couple important calculations, familiarize yourself with the housing market, understand the costs involved and get a sense of what homeownership is like. Here are five tips to help make sure you purchase a home that fits within your budget.

1. Sit Down and Budget

First of all, you need to figure out how much cash you can come up with for a down payment. You’ll need at least a 5% down payment to secure a mortgage loan, but larger down payments are recommended whenever possible. Then you’ll need to calculate a monthly budget. When you are no longer paying rent and you have eliminated any unnecessary bills, what will be left for the mortgage payment and other fees?

2. Be Realistic about Your Resources

If you’re shopping around in Chula Vista, homes you love have probably already caught your eye, but it’s unwise to get carried away before speaking with a professional. You might be setting yourself up for disappointment. Get a few estimates from lenders to see how much you can afford to borrow, and avoid looking at properties that are out of that range.

3. Prepare Yourself for Homeownership 

There is a myriad of additional costs that come with homeownership that you must be aware of. Here are a few additional fees you will encounter:

  • Closing costs will come to about 2-5% of the total purchase price.
  • If your down payment is less than 20%, you need private mortgage insurance.
  • Home maintenance is completely the owner’s responsibility, e.g. gutter cleaning, lawn care, repairs and renovations, replacing old systems and appliances, sewage, termite inspections, water service, etc.

4. Think about the Future

Part of being realistic about and prepared for homeownership is imagining yourself in the future, after buying a home that you are interested in. You might think to yourself, “I’ll make it work,” when you see a gorgeous home in the perfect neighborhood, but will those numbers really work once you’re stuck with a mortgage you can’t afford for years to come? Before buying a home, try living as if you’ve already bought it for three months, and see if you can realistically live with that payment.

5. Set Your Sights at a Reasonable Level

When looking at homes, it may actually be better to start with homes that are below your budget limit, and keep an open mind. Then you can only go up from there, and you are more likely to find a home that fits within your budget without being too disappointed.

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Team Ratcliffe - McMillin Realty

During the home buying process, it is easy (especially during these times) to get overwhelmed and frustrated. After so so many offers, a bid of mine was finally accepted. If it weren't for Team Ratcliffe and especially Matt Gover, I would be renting at this very moment. It was their persistance that kept me in a positive attitude to continue the long process of home ownership. I am satisfied to the utmost degree with their work ethic, perstistance, knowledge, and competency! They are a great team and I trust them to handle any of my future endeavors in the Real Estate market. I would reccomend Team Ratcliffe for anyone out there who is considering buying or selling a home. Thank you Team Ratcliffe for all your hard work!!! ----Chris I

My short sale experience was made so much easier by Joe; through thick and thin, he was willing to stick it out to get the deal done. He was a lot patient than I was and worked hard to get the negotiations done with the banks. There are a lot of realtors out there but Joe was the first one who I felt was exceptional. ---- Aye T, 5/19/2012

Miracle workers, that about sums it up. Joe and Pam worked endlessly to sell my home as a short sale in Eastlake. They made the impossible (working with Green Tree) possible. They dedicated countless hours month after month on this sale and kept me in the loop the entire time. I don't think I could emphasis enough the great communication from Joe. He answered his phone every time I called, even at wonky hours and weekends. An amazing team with integrity and the knowledge to sell homes. I would recommend to everyone. ---- Cassandra W, 5/3/2012