REALTOR® Magazine-Daily News-Are Your Buyers Financially Ready?

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Daily Real Estate News | March 20, 2007 | Are Your Buyers Financially Ready?
Owning a home isn’t for everyone. Buyers with no savings and a lot of credit card debt may not be in any position to buy.

"You need to have a little bit of savings to be a responsible home owner, because you're the owner now," says Craig Jarrell, immediate past president of the Dallas Mortgage Bankers Association. "You have to do the upkeep and maintenance-side out of your own pocket. You're the landlord now."

Potential home owners should have enough money to be able to pay monthly housing costs, including principal, interest, taxes, and insurance, with no more than 33 percent of their gross income. Adding in credit card debt, student loans, and auto loans should consume no more than 38 percent of their gross income, according to Michael Eisenberg, a member of the American Institute of Certified Public Accountants’ Financial Literacy Commission.

"What you have to have is a certain comfort level about your finances," Eisenberg says. "Otherwise, things start to crumble."

Source: The Dallas Morning News, Pamela Yip (03/19/07)