Homeownership is undoubtedly everyone’s dream. When you start thinking about homeownership, the first question that will probably cross your mind is whether you can afford it. Getting yourself on the property ladder in Las Vegas is such a great thing. Nonetheless, you should first be in a financial position to afford the costs involved.
Currently, the median price of a home in Las Vegas is $300,000. This is way out of reach for many prospective homeowners. Nonetheless, it is still an affordable amount. You should figure out how much money you need to afford to buy a house at that price.
The most challenging part of the home-buying process, especially for first-timers, is figuring out what’s affordable. Often, most buyers’ decision depends on the amount of money that banks are willing to lend. However, a bank can only give you what you can afford. When thinking about whether or not you can afford to buy a home, here are five factors to consider.
The Down Payment
If you can’t afford to make full payment for a house, you should determine how much money you can put down. If you have enough money to make a 20% down payment or more, you will be more attractive to lenders. The interest rates that you will pay on your mortgage will also be less.
Even if you can’t afford a 20% down payment, you shouldn’t get discouraged since there are many ways of purchasing a home with little or no down payment. While thinking about the down payment, you should also ensure that you set aside money to cover closing costs, inspections, appraisals, and even moving expenses.
Your Annual Income
Your annual income should be the parameter for determining whether you can afford a house. It should also be the starting point as you figure out your overall budget for purchasing the home. Your income should be able to cover mortgage payments. Failure to do so means you could end up overstretching your finances or even putting yourself at the risk of foreclosure.
The Available Funds
When looking to buy a house in Las Vegas, it is dangerous to purchase without any fallback plan. You should not exhaust your savings when making the initial deposit. Without a fallback plan, you could find yourself in financial ruin in case you lose your job or experience a similar disaster while still paying for the property. Always ask yourself about how much cushion you have in the bank to cover any emergencies that might arise.
Your Credit Profile
Very few people can afford to make a one-off payment for the property that they intend to purchase. As a result, most prospective homeowners opt for mortgages to make their dreams come true. If you are planning to apply for a home loan, you should keep in mind that your credit score will determine your mortgage rates.
Therefore, you should first establish what your credit score is before you even start shopping for a house. If your credit score is low, there’s a possibility that your application will get rejected. In this case, take steps towards improving it.