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Real Estate doesn’t have to be difficult, but it can sometimes be confusing. While we wish the fundamentals of real estate were taught in schools everywhere, the reality is that many people go into their first transaction, whether it’s a short term lease or buying a home, without some very important basic information. So here at Copper Hill, we’re answering your questions on Real Estate, Philadelphia, and much more. This is the second iteration of the mailbag; we have a feeling there will be more.
How do I know what I can afford when searching for a home?
This is a fantastic question. It’s very easy to be intimidated by the price tag on a home, or to see a price on a home you love and not know whether or not it’s within your range. The answer to this question depends on how you’re purchasing your home. If you’re buying a home entirely in cash, the answer is pretty straightforward; if you don’t have the money on hand, it’s out of your price range.
But if you’re obtaining a mortgage like the vast majority of home purchasers, this answer will depend on two things; your debt-to-income ratio and your down payment. Your debt-to-income ratio, aka the amount of money you’re pulling in each month after other financial obligations, dictates how much money the bank is willing to lend you. If you’re making $2000 per month after debts, the bank is unlikely to give you a loan that requires you to pay twice that per month back to them. Likewise; if you make $5000 per month, getting a loan for $1000 per month shouldn’t be too difficult. The mortgage amounts can always be offset by a higher down payment, the second component in the equation. The more money down, the less paid over time. Simply put, money up front makes the long term easier, it’s just a matter of what you have.
How can I boost my chances of having my rental application accepted?
The answer to this question can vary from landlord to landlord, but in short, the more income you can show, the better. Landlords are chiefly concerned with the ability of their tenants to pay over the life of the lease rather than requiring a down payment like in a home purchase. Demonstrating the ability to pay every month is paramount here.
How can you get a leg up? If your income isn’t as secure as others, or you’re looking to stand out, consider including assets, including bank account amounts. This will provide the landlord with more reassurance that if your income were to be reduced, you’d have some backup to tap into and make the payments without missing a beat. For the same reason, it’s also never a bad idea to consider a co-signer to boost your application.
I don’t have a car. What should I look for in a rental?
Location, location, location. If you’re living in the city without a car, public transportation is your best friend. It’s best to consider neighborhoods with either a strong bus presence or a train station within a reasonable walking distance from your prospective unit. If you’re looking into an apartment complex, it’s a good idea to consider places with either a shuttle or bicycle parking as well. These amenities are often included and can be lifesavers when you need to get where you’re going.
