Many people are wondering – how much income is needed to buy a home in Palm Beach County these days?
If you are earning a salary as a middle income American – for example, as a teacher, or a mid-level manager – you may surprised to find out that your income may not help you buy as much house as you thought it could.
The main challenge homebuyers are facing right now in the market is a classic challenge. There are simply too many buyers in the market, and not enough sellers. This imbalance pushes up the prices of homes currently listed, and as a result, potential buyers are squeezed out of the market.
In normal market conditions, financial advisors say that the rule of thumb for how much house you can afford is about two and half times your annual salary. But in a seller’s market such as the one we’re in now, it’s not quite that simple. You can stay conservative by choosing a home that is under the maximum your financing is pre-approved to, but you’ll probably have to just give up some things on your home-buying wish list.
Here’s some tips for finding a home that you can afford.
Get Pre-Approved with a qualified mortgage broker
One of the most important parts of the homebuyer process is finding out how much financing you qualify for. In fact, it’s so important, that our real estate agents will not work with a buyer until a pre-qual letter is in hand.
A qualified mortgage broker (we have many partners that we trust who we can refer to you!) will be able to tell you exactly how much of a house you can afford, and at what terms, based on your income and your credit. That gives you a framework within which to begin your home search.
Save as much for a down payment as possible
Your mortgage broker will explain to you how important a big down payment is. But generally speaking, the more you can afford to put down, the better the mortgage terms will be. A down payment of 20% or more is ideal for obtaining the best mortgage rates and terms available right now.
Also, don’t over-extend your credit in the months leading up to your expected purchase date. It’s OK to use unsecured credit like credit cards, so long as you are regularly paying off the balance, and if you are holding a balance, you’re keeping it well below the limits.
Listen to your real estate agent!
The most important tip we can offer right now is to listen to your Realtor (seriously!) If your Realtor is worth their salt, they know the market inside and out. They are going to know how to effectively navigate a seller’s market. In a seller’s market, the seller is the one holding the cards, and if you don’t have a great Realtor, you may end up overpaying for a home.
If you are shopping Realtors right now, ask them: when was your last deal? If it was a year ago, for a neighbor, then you may want to hire a full-time Realtor or Broker.
If you’re in the market for a home in Palm Beach County, give us a call at 561-500-LIST! One of our full-time, expert and professional Realtors will be able to answer all of your questions, and get you set up on your search for your perfect home.