When you apply for a mortgage, you will have to qualify to be able to borrow. Typically, lenders require you to spend no more than 28% of your monthly income to repay the combined total of your mortgage loan, property taxes, and homeowners’ insurance. For example, if your gross pay is $54,000 a year, or $4,500 a month, your housing expenses could be up to $1,260.
Most lenders also consider your other financial responsibilities, including car payments, personal loans, college loans, and other debts. They don’t want these expenses—plus your housing costs—to be more than about 36% of your monthly income. In short, they want to be sure you’ll be able to pay your mortgage before they let you borrow.
A real estate agent can provide valuable assistance in buying a home. An agent knows what’s available in a particular neighborhood, what the price trends are, and how current asking prices relate to actual sales prices.
You can look for an agent the same way you look for a financial planner or other professional. Ask your friends and family for recommendations, check out your local resources and various real estate websites, and interview several people before you decide on the person to work with. It could turn out to be an extended relationship, and you want it to be a productive one.
Traditional real estate agents and the real estate firms that list homes for sale are paid by the seller and represent the seller’s interest. That doesn’t mean that, as a buyer, you can’t establish a good relationship with sellers’ agents or use them to find a home at a price you can afford. Some buyers, though, prefer to hire buyers’ agents to represent their interests and negotiate the sale price and contract terms.