If you’re looking to buy a home, you should follow the 30/30/3 rule, according to experts. This will stop you being one of the 4% of buyers whose property purchases fall through. This rule also ensures that you can afford the property you’re buying and that everything goes smoothly. But what exactly is the 30/30/3 rule and what other property financing tips should you follow?
CNBC describes the 30/30/3 rule as a financial protection measure for homebuyers. The idea is that your monthly mortgage should be no more than 30% of your income. You should also have 30% of your home’s value saved in cash, and your home shouldn’t cost more than 3 times your annual salary. It’s highly recommended that you have and use a 20% down payment, regardless of what lower down payment deals are on the market. This means you’ll have paid off a sizable chunk of your home which will make your property purchase more affordable in the long-run.
When a property is listed as ‘Pending’, you might think you haven’t got a chance of owning it. But this isn’t true. Around 4% of house sales fall through because of factors such as financing issues or inspection concerns. The best way to find out if a sale is likely to fall through is to speak to the agent. If you suspect that it will, you can slip in a backup offer and nab the home of your dreams. If your backup offer was accepted, be as flexible as possible. For example, if the buyers want to stay put for an extra month or so, agree to it, rather than cause a fuss. This will show you in a good light and ensure no hitches happen.
There’s an estimated shortage of 5 million properties in America. The number of people wanting to sell their homes is low, too. This has resulted in bidding wars where multiple buyers are fighting to secure the same property. Naturally, most sellers will accept the highest bid and everyone else will lose out. But there is one way to make yourself stand out. If you’ve got a mortgage pre-approval but the highest bidder hasn’t, you’ll be a more attractive buyer. A mortgage pre-approval shows you’re genuine and serious about the purchase. It also helps to reduce the closing period. So, make sure you’ve got your paperwork in order before you start bidding on a home.
It’s essential that you’ve got finances in order when you want to buy a house. These tips will help you get everything ready so you can get on the property ladder sooner rather than later.