How Much Gulf Shores House Can You Afford?

Before you start to look for a Gulf Shores house, the first question you should ask is, "how much house can I afford?"

Last month, we devoted our entire Gulf Shores real estate newsletter to helping those considering selling their home figure out how to find the right agent to help them market their property.

This month, we're devoting our entire newsletter to helping potential Gulf Shores home buyers know just how much Gulf Shores house they can afford to buy.

How Much Gulf Shores House Can You Afford – Basic Factors

When you are wondering “how much can I afford to spend on a Gulf Shores house,” the bottom line is what size mortgage can you qualify for? There are several variables from your personal financial history that will factor into the answer, including:

• Your income
• Your credit rating
• Your existing debt
• Your down payment

To those existing factors, you can add some variables of the Gulf Shores housing market, and your own choices as you plan to take on a mortgage:

• The mortgage term (fifteen years,thirty years, fixed rate, adjustable rate, etc.)
• The current interest rate
• Private mortgage insurance (if your expected down payment is less than twenty percent of the purchase price)
• The current Gulf Shores real estate market

How Much Gulf Shores House Can You Afford – The Firm Answer

One way to do it is to go to your bank and request pre-approval for a mortgage. With a pre-approved loan in hand you will know exactly how high you can go in shopping for that perfect Gulf Shores house.

Instead of just a guess you will have a firm number in hand when you begin to look at all the homes for sale in the Gulf Shores market. You won't be in for any surprises when you make an offer on a Gulf Shores house and then find out you don't even qualify for the mortgage to buy that house.

Having a pre-approved loan also facilitates your ability to move quickly on a Gulf Shores house when you do find the right one. Time can be of the essence—especially if you have competition for the purchase of the home you have your eye on. Very often, the first buyer who brings money (and an approved mortgage) to the table is the buyer who actually walks away with the title. With your loan pre-approved, you won't have any hold ups in the process, because you won't have to be waiting to hear back from the lender.

Can You, or Should You, Buy a Gulf Shores House Now?

Owning a Gulf Shores house should not burden you or make you feel like you've bitten off more than you can chew. After answering the question "how much Gulf Shores house can I afford?", the next question you need to answer is, "How much house SHOULD I buy?"

There is a lot to be said for not maxing out your credit limit when buying a home. If you choose a Gulf Shores house with a price lower than the maximum you were pre-approved for, you will have an easier time making your payments, or better yet, you should be able to pay extra on the principle and save yourself money by paying off the loan early.

The more down payment you can bring to the table, the smaller the loan you will have to be paying interest on. In the long run, the largest portion of the price you pay for a house is typically the interest on the loan. If you hold off on buying the house until you can save more down payment, you could save in the long run, even though you may end up paying more for the house later.

How Much Gulf Shores House Can You Afford "On Your Present Income?"

Ask yourself whether your job is secure. Are you certain to keep the salary you are currently making. If you're making good money when you fill out your loan application, but later get downsized or laid off, you could be in serious danger of losing your home if you can't keep up the payments. It happened to a record number of people during the recent "Great Recession."

To ensure the security of your home, you might consider some or all of the following measures, and factor their cost into the overall cost of your mortgage and home ownership:

• A life insurance policy on the income earner sufficient to pay off the mortgage so the family could stay in the home in the unfortunate event of losing the income earner.
   
• Disability insurance and unemployment insurance, enough to make sure your family could continue making house payments if the income earner were injured or laid off.
   
• Sufficient savings for your family to live for several months (including mortgage payments) if the income earner were laid off and needed time to find a new job.

These possible scenarios add weight to the idea we mentioned about choosing a home that does not stretch your financial resources to the maximum. If you purchase a Gulf Shores house that maxes out your current ability to pay, it would be that much harder to make ends meet if you found yourself living on a lesser income in the future. A lower monthly payment could be an easier target to hit if you find yourself having to do with less than your current level of income.

How Much Gulf Shores House – Bottom Line

As you can see, answering the question of "How much Gulf Shores house can I really afford?" is not a cut and dry process. There are many variables. But one thing that holds true, regardless of your financial status, job security, amount of down payment, or any of the other factors you have to consider, is this:

When buying Gulf Shores real estate, you should ALWAYS have a real estate agent working for you to help you through the homebuying maze.

It's true, you can look up some of the Gulf Shores homes for sale online yourself, but a real estate agent or broker has the inside track on all the available properties, probably including some inside knowledge about how long various properties have been on the market, how willing the sellers might be to negotiate, and when a Gulf Shores house is overpriced for the market. A real estate agent working for you will be doing everything he or she can do to get you into the Gulf Shores home you really want, for the least money possible.

If you're just starting your Gulf Shores house hunting expedition, consider these tips, and be sure not to try to do it on your own. After all, having an agent helping you find the perfect Gulf Shores house to fit your needs and your budget will not cost you any more than doing it on your own. In fact, in most cases, having an agent helping you will save you money in the long run.

Call us today or use the contact link at our website to let us know how we can help you find the perfect Gulf Shores house for your needs and your budget.