Introduction of The 30/25/35 Rule for Buying a Home
The 30/25/35 Rule for Buying a Home. but if you don’t plan to finance it there are really certain things you should Keep in mind that they will make your life a little easier, they will reduce the risk of non-payment in the future and then they really will do everything to you simply much easier if you consider truly the numbers and do the math for your particular case Also keep in mind that this is a general rule that is to say that you do not have to be exact and that the numbers must be perfect but the more they approach better and preferably that if they are in terms of expense they do not go up or Regarding the weight of putting money in the initial depot, it is not less So.
What does 30 basically consist of in the first number of rule 30 25 35 because it is simply that you can, you are going to put an initial fee that is to say an initial deposit amount to borrow 70 percent you are going to put a 30 percent in Colombia for example because this amount is mandatory and the bank will not lend you more than 70 percent in other countries if they lend you the 80 percent 90 percent sometimes even with certain characteristics up to 100 percent of people who love this type of credit because they think they should just take less money out of their pocket and so that’s going to make things a little easier for them and not really at the financially and mathematically.
What makes the most sense is to put a higher amount possible down payment the minimum recommended even if you have the possibility to put less is 30 percent because in Colombia we simply have the restriction that it is the minimum 30 and that’s it but you have to take into account as such that this is the value to which we must contribute as the objective is to say that if you are clear approximately how much the house costs since you already have to program you for have 30 percent even more than 30 percent as I am going to mention in an instant then we have 25 and with that, we mean that the monthly fee of the mortgage credit including principal, interest, and insurance that will surely go to go there because it should not exceed 25 percent of your income you take your Enter the article between 4 and.
if you do not care the same or less the quota is perfect otherwise you are unnecessarily squeezing the banks may
That accept up to 30 percent are 33 percent 35 percent some they may even get people to accept you a 40 percent fee see your income and this is not right because it is definitely not healthy at that case what you should do is wait to have money saved more for the down payment so that the fees go down or just search a cheaper house and we finally have number 35 this is where We talk that your home should cost you a maximum of 35% of your income but We are not only talking about the installment of the credit, capital, interest, and insurance We also talk about the property tax each year we divide in the month and how much.
We have left that amount and how much the quota adds us and how much we have left in proportion to income, we talk about, for example, the public services since that is your case just as inconsiderate no matter what before you were paying in a house for rent you must also have the encounters and for example, it is not a house but an apartment in a set of radio you must cancel an administration fee also fee and surveillance the same then makes the sum of all possible expenses and costs of your home in addition to including the loan fee and This all together should not exceed 35 percent of your income to truly be on a healthy level otherwise you know that your house is costing you more than.
It should and it is known financially that represents a much higher risk and that even later can mean problems if the house is to be bought as a couple can even add the income to make the accounts in fact many banks accept that the couple the two people together sign the loan agree to pay as joint debtors or co-debtor of each other and simply between the two add up to their income can afford a better house if perhaps the installments are higher but the income of the two helped to cover that expense as such you have to be very careful in the sense that well, the relationship it may not last forever so you have to know what you are going to do in that case it is going to touch to sell emergency and lose a little money or simply be clear really that the financial situation the two will be stable and it will be the same for a long time nowhere.
We have several requirements and objectives to which we should aim the first of them is clearly having an excellent credit history and
That history Credit as mentioned by many other videos is very easily strengthened through a mechanism like credit cards that you don’t need get into debt to do what you can do shopping at a fee-paying without interest the same month when the fact arrives and that you can even have credit cards that do not charge you any cost extra like handling ports annuities or insurance and stuff like that simply showing that you can comply with paying the money that you lend regardless of the mechanism there is no need to spend money the fact is that many banks analyze what your credit history is and there are people who believe that just because they have never asked for loan banks will consider you to be a person with good purchasing power that you never need to go into debt, on the contrary.
That is the worst letter of presentation to the banks because the credit history is how you have been in the past to pay financial obligations in other words what is your history as a payer and author how you have behaved in terms of your commitments and obligations and if you do not have an excellent record if you score is low because you have something that you did not pay on time whatever They will probably reject you and that’s it because this is a credit to many years probably two decades and in some countries, up to three decades paying and if it really is not so full long different whatever it is because you can really have the interest rate a slightly higher since you represent a greater risk for the bank and a rate of slightly higher interest for 20 years or even if you prepay ten years or seven years is going to cost you a lot, a lot of money and this is where.
It applies truly all the knowledge we have acquired regarding cards credit and how to use them correctly without spending a penny strengthening our credit history taking advantage to save amounts incredible amounts of money when buying our own house also you have to take into Note that in the six months before requesting the credit study for housing we can not open any financial obligation we should not do it or get a new credit card or ask for a loan in any part or buy on credit in a shoe store nothing besides there are banks that they are simply going to offer you high rates just because they think they can do it because there are people who simply ask for a loan with them and looks for us nowhere else and accepts the first thing it finds then The idea is that you go to a bank, the request is the study they give you an approval letter a proposal of rate and amount to lend the safest thing is.
That it happens like this even if you don’t have the house and with
That you go to another bank take the same documentation or whatever they ask to see if they can improve that proposal if they improve it they could even return to the first entity and tell you to see is that this other bank is offering me better conditions to which you can improve that offer and if I do not can improve because he took out the credit and they know that they would lose a customer who I would pay a lot of money in the long run so they may make a better proposed as such and you can do this because it depends on the time and disposition you have but clearly it may be a few days of work effort of going to the banks and this and that it saves you so much money.
That worth your time of course one of the things to be aware that you are going to acquire a debt probably 15 20 or up to 30 years depending on your location and what happens that when you already acquire a debt you are making a commitment to pay monthly almost than by time undefined an amount that if for now, I say that amount is fine I also have to be sure that this amount will be fine in ten years with three 5 years out of 15 years because I have some a plan to make the payment of that debt in an accelerated way this is one of the largest purchases or perhaps the largest purchase we are going to make in our life and then it is important knowing what is real.
What is now acquiring is an obligation and we have to be aware and clear about our future job stability or a contingency plan in case it is not guaranteed there is also certain considerations that we must take into account one of them is that about two percent of the home’s value goes to annual expenses repair and maintenance There are many people who believe that a house always it is valued but what is valued is not the house it is the land the ground underneath which is built will always rise in fact it will always rise relatively proportional to the country’s gross domestic product and some other economic factors but the house the walls the wood the things the drawers the tubes all that is deteriorating bathing their are products that really depreciate, that is, the house depreciated the land is valued between the more or less maintain a balance they may meet or exceed inflation and therefore people considers that the house is valued those who do not take inflation into account they believe that.
The house is increasing in price all the time and it really is a house that is worth one hundred thousand dollars today
And that is worth between ten years one hundred fifty thousand dollars is worth the same surely if the inflation in those ten years was 50 percent, so you have to take into account that that house is going to deteriorate simply because they are materials that are thus wearing out over time and sometimes you have to replace them sometimes there is simply We have to change a water meter for gas energy and they are expenses that we must assume therefore I should have a budget of approximately 2% of the value of the house each year in addition to taking into account that not only when selling a house of cost but when buying a house there are costs with which I owe assume both buyer and seller assume their part and can be considered that have been between 3 and 6 percent of the total value of the house especially.
When there is a credit study since banks require certain things necessary to be able to make the disbursement and the same happens if you in some time you plan to sell the house after a while other than that think that simply Alexis and quantity that is what you are going to receive because that’s one of the things that people consider surprise expenses and come as no surprise because people have actually been around for decades or hundreds of years assuming them and well, it is really about time that we are aware that this is there that we take it into account within the budget and finally you can take it into account the rule of number 5 to determine roughly how much the home you can buy should be worth this is a very generic rule and may change depending on where you live off your income even of the country in which you but approximately.
It is said that economically you can access a house that is worth 5 times more than your annual income in other words if you earn 20 thousand dollars per year you could have a house of 100,000 dollars and do the math with the other rule that I mentioned to you anyway if you already have debts and still the bank accepts you then there is this number 5 should not be so high because they are going to keep the fees very high and you will probably blow your limit monthly or your monthly payment in proportion to all debts that do not owe between 35 and 40 percent and that is really stretching that expense a bit and.
That financial obligation, so you could reduce this number even to 4 to 3 to 2.5 depending on how you are in obligations at
This time as this in your installments or if you are paying a car you are paying credit cards or what is ideal, would be that if you are debt-free then you can have in account the rule of 5 in last buying a house is a matter of doing accounts of put pencil to really analyze what your chances are sure if you are doing it it is because you have a good amount of money saved for the down payment and you are surely tired of paying rent or probably living in the house of a relative which is not ideal either Be that as it may, you have to do the best possible accounts so that let us know that this is a good decision because we should be committed with living in that house that.