How much can you afford for a house?
An important consideration is the matter of paying for a new home.
Here are two ways frequently used to estimate a buyer's ability to meet house payments.
1. The price of the home generally should not exceed two times your annual family income.
2. A homeowner usually should not pay more than 38 percent of income after Federal tax for monthly housing expense (payment on the mortgage loan plus average cost of heat, utilities, repair and maintenance).
The buyer should have the cash necessary to meet the down-payment and other expenses at closing time. Ask your real estate sales agent or lender to provide an estimate of all closing costs needed at the time of settlement. Quite often the expenses are more than a new home purchaser expects.
Congress passed the Real Estate Settlement Procedures Act (RESPA) to protect homebuyers from unnecessarily high settlement costs.
RESPA applies to all lenders and persons conducting settlement of federally related home mortgages. It prohibits certain abusive practices: referral fees and kickbacks are illegal; sellers are likely will not designate borrower's title insurance firms; and very large escrow accounts can't be maintained or established.
RESPA requires advance estimates of settlement costs. It also requires that all borrowers of federally related mortgage loans receive a booklet through the lender, prepared by the Department of Housing and Urban Development (HUD), containing information about real estate transactions, settlement services, cost comparisons and relevant consumer protection laws.
One day before the settlement, the borrower may request that the person who will conduct the settlement provide information on the known actual settlement costs. At settlement, both the buyer and seller are entitled to a statement itemizing the costs they paid in connection with the transaction.
If you feel a provider of settlement services has violated RESPA, address your complaint to the agency or association that has supervisory responsibility over the provider. Check with local and state governments or consumer agencies for the names of such agencies or associations.
tags: how much, house, afford
Comments
No comments so far for this article