I congratulate your high desires and level of motivation to move out of your apartment and into a home. However, I caution you. 20% or 3.5% down, or anything in between has nothing to do with home ownership. Home ownership and what you can afford has more to do with your income than anything else. If your household makes $49,981/year which is the median income in Atlanta, recorded in 2009, then the amount of home you could afford is $175,000...How did i get to this? The Math is, simple (if you know it). Here it is: Yearly Income / 12 = Monthly Income . Take Monthly Income *30% = Affordable Mortgage Payment. $49,981/12= $4651. Now, $4165*.3 = $1249. A Mortgage at $175,000 at 5% interest rate, with taxes of 1.25% and PMI of .5% = $1251. Found at http://www.mortgagecalculator.org/
More important than being able to afford your home payment is being able to live there stress free. You see, if you could change your lifestyle habits in a way that would allow you to save 20% down for your home, you could be 90% assured you would be able to live in your home stress free. You see as a renter, you donâ€™t have to fix the water heater that breaks the same month your best friendâ€™s wedding is and your paycheck was spent on their present, now it has to be spent on a water heater. My point is, when owning a home, the unexpected happens at the worst times, and you donâ€™t have a choice to fix or not fix, and you donâ€™t want to fix them on credit because that is digging a big hole. The fact that you say it is â€œimpossibleâ€ to save the 20% tells me you need to first work on a budget, and living within your means. If saving for something that is important as a roof over your head is impossible, then what is possible? Trust me, I have been there, I have also been the guy who makes a huge paycheck for 18 months thinking the world was rosy to find out I was living a â€œfalse dream.â€ Lord willing, I was broke, and was able to learn that saving 20% while difficult is possible, and now saving 10% or more a year of my income is a standard. Lord willing, with three children, and a wonderful wife I have been able to save more money in 12 months than I was the past ten years of my life..my point, with the correct knowledge you too can make the impossible, possible. If you need a good place to start on a budget, look for Dave Ramseyâ€™s Financial Peace University, there are local groups that meet all over America and learn financial wisdom together. Or most churches offer, Crown Financial Bible study. Crown is the foundation Dave uses, either class is awesome, I have gone through Crown as a student and as a leader. Just like watching your weight which we do every day/week, your finances are no different, you have to follow a pattern that allows for a healthy financial situation. Best of luck to you. DO NOT OVERSPEND, I DID that and it ended up in financial disasterâ€¦.
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