How Income Influences Home Buying
Your income will have a major influence on big purchases, regardless of the avenue.
If you’re trying to get a home, this is one of the main contributing factors to whether a lender will consider financing your home. Your best bet is to know the full extent of your finances like the back of your hand.
First, they’ll want a solid picture of your income prior to any possible deductions. These include taxes, among other areas that may garnish your check before it hits your account. And this is only the start. Read on to learn more.
Net Vs. Gross Income
Whatever’s left after these deductions is what’s known as your net.
You’ll want to take the bulk of this, and put it towards all your non-negotiables. These are your monthly bills. Utilities and food are some of your biggest categories, along with any car notes and related billings.
Once all of these are taken care of, now you can start to focus on the less necessary expenses. These include eating out, some new technology you’re interested in, and similar vanity purchases. We know, it’s a lot to keep track of. But in the long run, you’ll thank yourself for it.
50-20-30
One technique that’s proven very effective for managing your finances is to split things into a manageable division.
Take half of your income, and put that towards bills. After that, you’ll want 20% of it to go straight into your savings account. The final 30% is what you can use to splurge on yourself. Because, after all, life is about balance.
This is also a great way to know what your income can actually handle.
If you’re eyeing a property that your 50% can’t handle, you know it may be out of your financial limits at the moment. Once you’ve gotten these ducks in a row, it’s time to reach out to LeapFrog Mortgage to take that next step. Contact us today to learn more.
