Buy More House For The Same Monthly Payment [VIDEO]

Video Transcript

there is a trick to making sure that you spend the most amount possible on your first home without overspending getting the maximum value out of your purchase squeezing out every possible penny so you can get your dream home let’s get started I’m Dan with home buyer.com we are the mortgage company for firsttime home buyers let’s jump in because what we’re doing is finding the maximum price for a home that you can afford while keeping within your budget and that figure that upper limit that price know this it’s going to change all the time literally every day because the secret here and you’ll understand as we move along the secret is that you should never buy a home based on its sale price for what it’s listed at you should buy a home based on its payment what it’s going to cost you in your budget and thinking like this is a shift in your mindset because it’s not the price of the home that set your budget it’s the price of the payment and that’s the place that we start with the payment with you thinking through your spending and choosing how much you want to spend on your home that number I can’t tell you what it is you may not know what it is but you have to find it because knowing how much you want to spend on your first home is the very first step toward actually buying your first home if you want press pause right now think about that number and come back or if you want some help some guidance General ways to think about what your payment should be we see that most home buyers set aside between 25 and 40% of their monthly income to spend on their housing payment depending on where they live higher cost areas bigger cities buyers tend toward the 40% numbers and buyers in lower cost areas smaller cities tend toward the 25 there is no wrong number as long as you’re comfortable with the expected payment maybe it’s what you pay in rent whatever feels right to you and once you find that number what you want to pay the rest of this gets easy because a mortgage payment is basic math it’s a plug-and-play formula which is four numbers and you already know one of them your payment you just found that number so we’re going to find numbers 2 three and four and there’s no great science behind any of them the three numbers your loan term your down payment amount and your mortgage rate loan term easy one 30 years you are going to use a 30-year mortgage everyone does whether you go with a fixed rate or adjustable mortgage your loan is going to last 30 years 95% of first-time home buyers choose 30-year mortgage so will you it’s low cost it’s flexible affordable 30 years that’s number two number three is your down payment size the amount of your own cash you’re using to buy a home the rest of the price of the house that’s your mortgage your down payment is your P portion of the purchase price now most people they want to bring as little of their own money as possible to the purchase the way to do that is with a conventional mortgage it’s with seven out of 10 home buyers used because conventional mortgages allow a 3% down payment and down payment funds can come from from anywhere from a savings account a retirement fund cash gifts from family if you’re so fortunate redemptions of credit card reward points anything so long as it’s verifiable it’s all in play so how much you put down that’s up to you that’s your number three which leaves us with only one number left and that is your mortgage rate I want to spend some time on this number on mortgage rates because your mortgage rate is your lever your mortgage rate will do more to change your range of available homes than anything else we talk about your rate will be the difference between getting the home you dream about the one that has everything and the home you had to settle for because your rate wasn’t so good so listen to me now if you only remember one thing remember this you control your rate can’t control the market but you can control your rate and that’s a big deal because every one percentage point that you can lower your mortgage rate will add 11% to your price range without changing your payment same payment 11% more home is a lot it’s an extra bedroom it’s a home on a prettier Street it’s a kitchen decked out with better appliances a home with an extra big garage or that doesn’t need repairs the lower your rate goes the farther your payment budget gets you now again you can’t control the market rates broadly move all the time we’re all just along for the ride but you can control your choice of mortgage providers the way you choose your loan and your credit score and that’s your biggest Advantage right now because you are not under contract to buy a home you have time so use it use your time to make your home better raise up your credit even 20 points makes a difference and you can do that in 30 days I’ll put a link in the description for how to fix your credit even if it’s not broken if you just want more points so click that link and catch yourself 20 points your rate will come down and you’ll be able to buy more home and then keep going the more you do to bring up your credit score the more you do to lower your rate you can add 11% to your maximum purchase purchase price raise your target search range by tens of thousands of dollars just by improving your credit so maybe that’s an unofficial fifth number here but in the formula the four numbers your mortgage rate is something that you can work and that’s how you buy your best possible house you find the payment you want to make you set your monthly budget then you use time to buy a better home because you can’t change markets but you can change yourself and the work you put in now actually starting now pays off when you buy pays off when you sell and build you a better life so find out now what you can afford to buy get a home buyer.com immediate mortgage approval start this process right pre-approved buyers do better if you like this video please subscribe for mortgage program updates and firsttime buyer assistance and when you are ready to see how much home that you can afford to buy get today’s current rates and that instant mortgage approval on the site 3 minutes or less with no paperwork I’m Dan withh home buyer.com the mortgage company for firsttime buyers happy home buying