Can you afford more house?
Bryan Zuetel
After talking with some friends about the possibility of selling their existing home and purchasing a larger home, we thought that we should help others consider the financial factors in moving up to a larger home.
Interest rates remain at historically low levels and buyer demand, at least in Southern California, has remained relatively stable. Many homeowners in Orange County and other areas of Southern California have at least some equity in their homes. So when considering whether to move up to a larger home, consider a few financial factors:
Debt to Income Ratio (DTI)
This calculator will provide you a debt-to-income percentage. This is one of the factors that lenders look at to decide if you are a good candidate for a mortgage. For most of Southern California, you want to keep your DTI under 50% and the lower it is the better candidate you are for a loan. For your new home, you'll want to calculate your new mortgage (see below) and use that figure in the calculator. Click here: http://www.bankrate.com/calculators/mortgages/ratio-debt-calculator.aspx
Equity Value of Your Current Home
Consider how much equity you have in your current home and whether you want to use some or all of it toward your down payment for your new home. Contact us to get a complimentary Comparative Market Analysis with an estimate of your current home value and the estimated proceeds that you would receive upon selling your home.
New Mortgage Payment
Using the equity in your current home as well as any other funds to put toward the down payment on your new home, you will have a clear picture what your monthly mortgage will be. Use this calculator to figure your new mortgage payment: http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx. Remember, the first factor - you want to keep your DTI under 50%.
With these three financial considerations, you should have a clear financial picture to enable you to make an informed decision if purchasing a larger home is right for you and your family. Esquire Real Estate is here to help you analyze and understand the multiple factors that might influence your decision. Please don't hesitate to call. We are here to help you.