There are SO many options for financing your home these days and it can be difficult deciding which one is best for you. It can be overwhelming, but you can do this!!
Here are some steps to get you started. The first things you need to consider are how much you can afford and how many years do you want to be paying on your mortgage.
To determine how much home you can afford, a general rule of thumb is that your total debt should not exceed 43% of your monthly income. Keep in mind, this includes not only your monthly mortgage payment, but student loans, car loans, as well as credit card debt. This does not include items such as utilities, cell phones bills and the like.
| Loan Amount | Est. Monthly Principal & Interest |
|---|---|
| $100,000 | $537 |
| $150,000 | $805 |
| $200,000 | $1,074 |
| $250,000 | $1,342 |
| $300,000 | $1,610 |
| $350,000 | $1,879 |
| $400,000 | $2,147 |
| Estimate of monthly principal and interest for a 30-year fixed rate mortgage at 5%. Taxes and insurance not included. | |
After determining how much home you can afford, the next step is deciding your down payment -the cash needed when you first purchase your home. THIS is a big part of helping you (and your lender) determine what kind of loan will work best for you. Don’t panic! There are a number of loan programs each requiring a different down payment amount.
- FHA– 3.5% down payment. Requires private mortgage insurance and upfront mortgage insurance.
- CONVENTIONAL– 3%-20% down payment. Offers many more options with varying down payment amounts. If you put down 20%, no mortgage insurance is required.
- VA Loan – 0% down payment. Available to American veterans and active duty personnel. Provide ability to purchase without down payment. (https://www.benefits.va.gov/homeloans/)
- USDA/RD Loan – 0% down payment. Offered for rural properties and supported by the U.S. Department of Agriculture. Can only be used if property is located in a RD eligible area. (https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do )
We know there is a lot to learn and absorb as you progress on your home buying journey! Tennessee Valley Realty is here to partner with you to make your journey as smooth as possible. Please reach out to us. We would love to be part of your team! Call Monica at 865-661-7790 or Jackie at 865-300-6296 with any questions you may have for us.
