Buying Gulf Shores real estate is still considered to be one of the biggest goals for most Gulf Shores residents who don't already own their own home. Saving for the down payment is a big hurdle for many. On top of the down payment, you'll need funds for closing costs as well. But just how much should you save if you're buying Gulf Shores real estate?
Short Term Plan for Buying Gulf Shores Real Estate
Lenders look at your pretax income when determining how to qualify you for a mortgage. When thinking about buying Gulf Shores real estate, you should plan on doing the same, using a percentage of your gross income for determining how much you need to save.
Being able to sock away 20 percent of your income could accelerate your home buying plan to the next 12 to 16 months. For example, if you're earning $96,000 per year, that's $19,200 saved after one year. $28,800 saved after a year and six months, which can be plenty of funds to make buying Gulf Shores real estate a reality.
Long Term Plan for Buying Gulf Shores Real Estate
Putting away at least 10 percent of your pretax income is a great place to start planning for buying Gulf Shores real estate. Using the same example of $96,000 of income, that's $9,600 per year allocated for home savings. It would only take an extra year to come up with the same type of cash in the short-term plan's one-year goal.
Saving a percentage of your income is no easy task, especially when you have those months where the money runs out before the month does. It requires diligence, attention to detail and financial discipline to consistently put that money in the bank despite other debts and household expenses.
Remember as you are diligently saving a portion of your income for buying Gulf Shores real estate: A lower down payment and lower total cash to close means a higher monthly mortgage payment. Conversely, a larger down payment gives you a lower mortgage payment. Also, the percentage of mortgage insurance lowers if a buyer uses more equity.
Determine Costs for Buying Gulf Shores Real Estate
Let's look at a home priced at $500,000. Given certain criteria, $27,500 is what it would take to close the deal. Here's the math:
• $500,000 purchase price.
• $10,000 closing costs (at 2-2.25 percent of the purchase price).
• $17,500 (a 3.5 percent FHA down payment).
• Giving you a total cash payment of $27,500 needed.
If you have been diligently saving for a house, and still have not been able to purchase a property, talk to a lender about getting pre-approved. Perhaps it's time to re-evaluate how much percentage of your income is going to saving versus what homes are selling for here in the Gulf Shores area.
To learn more and stay current on buying Gulf Shores real estate, as well as tips and information on buying a Gulf Shores home in general, check out our other articles by clicking on the Gulf Shores Home Buying Tips link to your right under Gulf Shores Real Estate Categories.