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    How to Know What You Can Afford

    If you are reading this you are likely on the path to either purchasing a home for the first time or you are looking to buy your next one. Perhaps you have even gone through the pre-approval process already and were shocked when your lender came back with a higher sales price range than you were expecting.

    If you were pre-approved for $300,000 it means you can afford the monthly mortgage payment that goes with it, right?!?  Maybe, maybe not.

    When lenders are assessing what price range you can afford during the home buying process, they are not doing a full lifestyle or cash flow analysis.  Lenders are looking for debt-to-income ratios (black and white) rather than the lifestyle choices that we make and what our actual monthly budget is!

    For instance, meet Joe Smith.  Joe has a VERY low debt-to-income ratio.  He is a lender’s dream client and has a high sales price max to go home shopping with.  BUT before he schedules his first showing, Joe made a wise decision! He asked his lender to show him a loan estimate at his max price to get an idea of what his monthly mortgage payment would be.

    When Joe got the loan estimate he realized that the lender had never asked him what his current monthly budget is.  In fact, come to think of it, Joe didn’t even know what his actual budget was. He just knew that there was always money in his bank account and he was saving a lot of money in his retirement and travel accounts.  (Boy does Joe love to travel!) When he saw that his monthly mortgage payment would be over $2,000/mo, Joe suddenly didn’t think buying a $300,000 house was so great. 

    Here’s why:

    *Joe LOVES to eat out.  He works hard and doesn’t want to cook.  He isn’t willing to sacrifice that to account for a high mortgage.
    *Every year Joe travels overseas for extended periods of time.  He spends at least ⅓ of his annual income in travel.
    *Next, Joe is committed to retiring early.  His motto is to pay cash and save for retirement until he retires one day with no debt.  (Great goal.) To do that, Joe can’t take up a ton of monthly cash flow to divert into a mortgage that he feels will rob him of his future.

    So, what does Joe do?  Joe works together with his real estate agent to decide what price range is in line with how he lives his life and what he is willing to spend on his monthly payment.  Come to find out, Joe’s comfort point is at $200,000 or less.  

    So how do you figure out what monthly mortgage payment is comfortable for you?

    I recommend BEFORE even getting pre-approved, that you begin with setting up a monthly budget and debt stacking plan (if debt is a concern for you).  This is what I call laying your financial foundation and it is what we teach in our Path to Home Ownership program. I then teach to practice using that monthly budget for 2-3 months BEFORE getting pre-approved so that you know you are comfortable in maintaining a budget.  Ideally, your mortgage payment would be at or less than ⅓ of your total income, but many lenders will still lend if you are closer to ½.

    Base your practice monthly budget around your ideal mortgage payment, not what you are currently paying in rent. This will give you a realistic picture of whether or not you are truly financially ready to take on a mortgage.

    In addition to creating a monthly budget, I also recommend meeting with a financial adviser who is willing to help you create a simple step-by-step plan to stack and eliminate debt as well as set up a financial plan that is realistic.

    For some free resources on budgeting you can also go to thebudgetmom.com.  There you will find savings trackers, budget sheets, and more. If you are ready to also meet with a financial advisor just send an email to homesalesinyourarea@gmail.com and Gina will connect you!

    Questions?  Call 717-963-0016.

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    Gina Casner

    In 2016, I began my tenure in real estate as a licensed Executive Assistant for a leading real estate training coach and subsequently for high-producing real estate teams. I very quickly fell in love with real estate and by 2019, I transitioned into personally helping clients turn their dreams into keys. After dozens of transactions, I have been dubbed the “unicorn hunter,” finding out-of-the-box solutions for clients looking for a home with unique requirements. In addition to managing my real estate practice, I am involved in providing community education on responsible home ownership through my exclusive Path to Home Ownership workshop series. I also am the founder of Chronically Strong, an organization that promotes mental health awareness and suicide prevention in our local communities. I take a holistic and individualized approach to real estate. Buying or selling a home in Central PA can be complex, sophisticated and often a deeply personal endeavor. Your experience should mimic the high level of customer service all of my clients have, while being very specific to your own individual needs. I work with a team of experts to provide a full, complete experience that only a cohesive team can consistently provide. Working with us, you will be given personal attention in every aspect of your home buying and selling experience with the professionalism and consistency of a thoughtful business model. And yes, superior results will follow! On a personal note, I attribute my success not only to my passion for helping clients execute on their next “big move”, but also to my knowledge regarding the psychology of buying and selling. My clientele works in diverse industries with an emphasis on technology, finance, medicine, law, and business. My real estate practice has grown successfully and consistently thanks to the repeat business of happy clients and their introductions to friends, family and neighbors. This track record is only possible because we deliver both results AND an enjoyable experience. Growing up, my family moved frequently all across the continental U.S., but you will hear me say that I am from California because that is the longest place that I lived during my formative years. Moving became a way of life for my family and each place I lived became a part of my story. It taught me that our home truly is the foundation of everything in our lives, and it is this belief that compels me to work hard for my clients when they are buying or selling their home. In many ways, our home becomes a part of our identity, an identity and memory that should be honored. I have been accused of being tenacious and super honest. I like to win (for my clients) but do so with a calm demeanor and a smile. I live in a raised ranch home in Lower Paxton Township with my main squeeze, my teenage son, and our very spoiled dog, Ginger. I have mad faith, and truly believe that each and every one of us is capable of great things. I graduated from Penn State University with a Bachelors’ in Sociology. There is a running joke in my family that every day I go to real estate school because every day my clients teach me something new. I continually invest time, money and thought into the latest sales, marketing and negotiation techniques. Why? Because I believe that you deserve to have the best working for you. I want to live life on my own terms, and am committed to helping you do the same. Would you like to work together? Please reach out. I look forward to hearing from you! Gina

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