Financing

Dayton Ohio is affordable, but how much home can you afford?
The better question is: How much to you feel comfortable paying? If you were not aware of the dangers of buying more house than you could afford prior to 2007, you are certainly painfully aware of it now. So before you begin to seriously shop for a home, take a brutally hard look at your finances- your income, debts, and expenses.

  • First, use an affordability calculator to determine what you might be able to afford.
  • Then, include closing costs. Although closing costs can be a point for negotiation, it’s important to understand what closing costs are and how much they might be. The general rule of thumb in Dayton Ohio is 3% for the first $100,000.
  • Don’t forget the gov’mint. They are going to take their share in property taxes- typically up to 2% of assessed value.
  • Homeowner’s insurance will run $50-100.00 per month.
  • Any HOA fees? Expect about 0.1% of sales price for monthly Home Owner’s Association fees.
  • That’s paying everyone else. Don’t forget about the home itself. Annual upkeep to keep your property in good repair might be 1-3% of the sales price.
  • Are you buying a home in disrepair? You’ve seen the Flip-It TV shows, right? Prepare yourself for more expenses and longer time than you thought.

So. How much Ramen noodle can one person eat? Take all the numbers you’ve just crunched and consider how you want to live. How much travel do you do per year? Like to stay home and host lavish parties? Have kids heading off to college? If you can be honest with yourself about your lifestyle, then your home can be a place of comfort and contentment for many years.

We have looked at general affordability issues. If you are ready to move to the next step, let’s talk about mortgages. Unless you are a loan officer, you probably can’t keep up with all the mortgage changes and information that is everywhere you turn. That’s okay. The same common sense that prevailed when our grandparents applied for loans is going to get you through the experience today. As Granny used to say, “If it sounds too good to be true, it probably is.” Thanks, Granny. Common sense mortgage advice your granny would approve of:

  1. A fixed-rate mortgage is preferable to an adjustable rate.
    15- and 30-year fixed-rate mortgages are the language of common sense. Safer than an adjustable for most of us and only movie stars get interest only loans- you aren’t a superstar, are you? No. I didn’t think so.
  2. Consider an FHA loan
    A great option if you have small down payment or low credit score. FHA (Federal Housing Administration) loans take time not money.
  3. Military families have an excellent option with a VA loan
    Great rates and terms- a VA loan is definitely worth looking into for veterans and surviving spouses.
  4. Try to put 20% down
    Ouch. I know that one’s gonna hurt, but, if you can put 20% down, you can skip the private mortgage insurance (PMI). You’ll save in the long run, and Granny would be proud.
  5. Get a conforming loan
    Better rates and better prices go to loan limits that the government prefers.

Find a lender who will answer your questions, or contact me, Teri@TheBrickRanch.com and I’ll send you the names of lenders who I know will answer your questions, and educate you in the process- now that’s something Granny didn’t have, but she would approve.