How Do I Decide What Neighborhood I Want to Live In?
If you've lived in an area for a long time, you probably already know which neighborhoods you're most interested in. If you're new to an area, though, it can be difficult to decide where, in particular, you should focus your house hunt. If you're not in a hurry to buy a home, wait until you've lived there for a while before you buy a home. It'll take a couple of months to figure out which neighborhoods are most appealing to you.
First, do some homework. Which neighborhoods have the best schools? Which have better access to shopping, parks, libraries, and public services like fire, police, and ambulance? Which neighborhoods have higher property values, and which can you afford? Ask the local police department which areas tend to have the highest crime rates. Then drive through some different neighborhoods, and rule out any areas you definitely wouldn't want to live in.
Once you've narrowed down your target area, park the car, get out, and walk around. Don't just rush through area - spend some good, quality time there. What do the residents seem like? Do they seem like people you'd want as neighbors? If you've got kids, are there other children for them to play with? Or - if you prefer peace and quiet - does the neighborhood have too many kids? Be sure you see the area at different times during the day; neighborhoods can feel very different at different times. What's it like during rush hour? In the middle of the day? At night?
Finally, talk to people. Ask long-time residents what neighborhoods they especially like, and why? If they were moving today, which area would they choose? Take their recommendations with a grain of salt - remember their needs may be very different from your own. But they might offer keen insight about different areas.
How Much House Can I Afford?
- The conventional wisdom for determining how much house you can afford is that:
- Housing costs (including principal, interest, taxes, and insurance) should be no more than 28% of your gross pay, or 35% of your take-home pay;
- Total debts (including mortgage, car loans, credit card payments, alimony, child support, etc.) should not exceed 33-36% of your gross income; and
- The sale price of your home should be approximately 2 ½ times your gross income.
Although in some "hot" real estate markets - New York City and Silicon Valley, for example - the average homebuyer may have trouble following these rules of thumb, they remain excellent guidelines. And in general, mortgage lenders will use these guidelines when they review your mortgage application.
Even if a lender feels that you qualify for a certain mortgage, however, that doesn't mean you can actually afford it. Remember that owning a home is more expensive than renting. Even if your monthly mortgage payments are lower than your current rent, as a homeowner, you're responsible for payments such as property taxes, homeowners insurance, utilities, upkeep expenses, and more. You don't want to stretch yourself too much.
LINK TO HOME AFFORDABILITY CALCULATOR HERE.
