Financial Planning Tips for Real Estate

Financial Planning Tips for Real Estate
So, what's in store for the real estate market for the next few years, and how can you be ready to get in on that great opportunity? Well, interestingly enough real estate prices are still trading at a ten to fifteen percent premium and even though interest rates are creeping up the market hasn't really caught up and corrected itself yet. So, the next couple of years will be critical. Now, I remember when houses were on the market a few years ago for a couple of days and they would get bid up and get bid up and, you know, a house that was listed for a million dollars would end up selling for a million and a half dollars because the real estate market was so out of control. Now, you see houses that are remaining on the market for months in some cases so wait it out, be patient, and look for the new opportunities ahead. Now, prices will eventually come down and the best thing you can do is to prepare now to figure out how much of a mortgage payment you can afford, how much can you put down and what's the value of the home that makes sense for your financial situation. Now, how do you determine what type of mortgage you can afford? Well, the easy rule of thumb is look at your take home pay, your gross income, so that's your income before taxes are taken out and multiply it by 30%. Your mortgage payment should be right around there, and that's what lenders will use to qualify you. The second thing that you can do is look at your debt ratio, this is something that's also very important. Your debt ratio cannot exceed a certain percentage, so if you have fifty percent of your money going to credit card debt that's not good. You need to work on reducing that over time. Your debt ratio should not exceed 30%, 36%, so again, with all of your gross pay, if your debt is more than 36%, you've got to look at that. Third, figure out how much you can save for the next few years for a down payment, and once you figure out what your mortgage payment is, how much your down payment is, it's easy to back into an interest rate. Check out the following website to determine how much of a home value you can buy.