What Can I Afford to Spend on My First House?
It’s easy to watch “Million Dollar Listing” and “House Hunters” and imagine yourself finding and moving into a dream home of your own. But when it’s time to get serious about your search, how can you figure out what you can actually afford? The experienced Real Estate team at YaYa Group has some guidance to help you get started!
First, get specific about what you need.
Do you have a growing family and need some additional bedroom space? Maybe you really want a finished basement that can be a hangout space for the teenagers, or a bonus room that can serve as a home office? Is having a separate guest bathroom important? Do you need a big yard for the dogs?
Get as specific as you can about your wants and needs in your home – not just now, but also for the next 5-10 years – so you can start thinking about what to look for. (Important note: this means getting specific about your realistic needs for your future in your first home, not necessarily listing everything you ever desire in a dream home!)
“Understand exactly what you need, and that will help you find the best home for you and your family,” says YaYa Group Realtor Partner Ro Azulay. “All of those criteria will help you determine your mortgage and what you can afford.”
Second, figure out how much you can afford to spend on a down payment.
Your down payment is the out of pocket cash you will pay for your home; the rest of the house will be paid with your mortgage. Get comfortable understanding your own financial situation, and understand how much cash you can realistically put toward your home purchase, as well as a reasonable budget for your monthly payment.
Your monthly home payment is more than just your mortgage principal and interest; it also can include:
- PMI (private mortgage insurance) – generally required for a down payment of under 20% of the total cost of the home
- Home insurance
- Property taxes
- Utilities and operating expenses (electricity, water and sewage, etc.)
Having an understanding of both what you have available for a down payment, and your budget for monthly payments, can help you understand your comprehensive home budget.
Third, meet with a mortgage advisor or lender.
A financial expert will review and analyze your finances, including your preferred cash down payment amount, credit score, and other existing loans and debts, to determine the size and type of loan you can qualify for.
“There’s tons of loan options out there, and a lender can help you find the best option for you,” says Louie Damonte, Realtor Partner at YaYa Group.
If you’re having a hard time determining how much cash you have available for a down payment, a lender can help there as well.
“A lender can outline and itemize everything that a buyer must know about what they need to bring to the table, in terms of a cash down payment and what a financial institution will loan them,” Damonte says.
Once your lender issues a pre-approval letter, you can begin looking in earnest for homes that align with your budget.
If you don’t know any lenders, your realtor can help you find one!
Finally, trust the process.
“Know that it’s a process, and sometimes it can take up to a month, or six months,” Azulay says. “But with the right realtor, you don’t need to compromise. Understand exactly what you need, and that will help you find the best home for you and your family.”
Want to talk more about the home-buying process, and hunt for homes in your budget around Northern Nevada? Connect with one of the experienced realtors on the YaYa Group team! Visit yayarealty.com to get in touch.
WHAT OUR CLIENTS SAY
- Working with Ro and the Yaya Group was an absolute joy! Back in 2019, I was looking to purchase my first home for me, my wife, and our young son. I was fairly new to Reno at the time, so I located the Yaya Group online and decided to work with them based solely on their superb ratings on Yelp.com (I never pay for products or services unless the majority of previous users highly rate them). Needless to say, my experience then was nothing short of 5-star. That's why when I needed to sell that very same home in 2022, there was no doubt in my mind to whom I was going to put in charge of selling it: The Yaya Group. From the start of my selling process, Ro was personable, attentive, and kind; it felt like I was working with an old friend, and this in spite of the fact I had never met him before the selling process. Ro called often to check on me and my family; he constantly updated me with each stage of the process; and he fought for my family's best interests when the buyer made some questionable and altogether unreasonable demands concerning the purchase of my house. Ultimately, Ro worked it all out, sold my house over what I thought I would actually get for it, and he made the entire process effortless, painless, and a joy. I'm moving out of the Reno area, but I still have friends here, and if any of them ever ask me for recommendations for a good realtor, I'd have no reservations about recommending Yaya, Ro, and the entire Yaya Group.
- "Being a professional photographer who photographs 10-15 real estate agent headshots weekly I have had time to pick and choose my real estate agent and ask all the questions I needed years before actually needing one. Finding the person who would take 2 self employed people and get them into a home is not an easy task. A year before we found our home Yaya and team would take us out to any home that we thought might work. No questions asked. We spent nights on the internet looking for potential homes only to view them and find a reason it didn't work. Yaya never said anything negative to us about this process at all. And this is what won us over in the end. Look… There are a crap ton of real estate agents in the area but we wanted someone who would take the time to listen to us and focus on our needs. We wanted someone that would talk to us and think for us. There were many times we were anxious and nervous and just didnt know the process… But Yaya simply came over to our home and worked it out with us. It wasnt just my wife and I on this… Yaya was there too. Personality is king. Make sure your money is going to someone who deserves it."
- "Working with Ro and YaYa on selling and buying a new home has been the best experience. You hear nightmare stories about selling and buying at the same time, but this process has been seamless. I sat down with Ro and YaYa to discuss my needs, and within 4 days my home was in escrow and over the amount I could ever dream. A few weeks later I was also in escrow on my new home. No storage fees, interim living between the two homes because they listened to my needs and found a buyer willing to work with my request. They are an amazing team to work with and I couldn’t have asked for a better experience."