If you’re thinking about moving to Kansas City, or already live here and are looking to buy a house, there are a lot of important considerations to be made and questions to answer. We’ve put together a quick guide of the most important things to figure out before buying a home in Kansas City.
Do These 4 Things Before You Buy a Home in Kansas City
1. Know How Much House You Can Afford (Front and Back-End Ratios)
The general rule is to be prepared to spend no more than 30% of your income on housing, but lenders use a slightly more complicated equation than that. In fact, lenders actually use two equations, called the “front-end ratio” and the “back-end ratio.” The front-end ratio is a percentage of your before-tax income and the back-end ratio is your total monthly debt as a percentage of your income (again, before tax). Standard rates for these ratios are 28% for the front-end and 36% for the back-end, but your lender may use different ratios (if they don’t tell you, ask!).
Calculate the front-end by dividing your gross income by 12 and then multiply by 0.28. That’s it, that’s your front-end ratio!
The back-end is a little more complicated. Start by adding up all your monthly debts that aren’t connected to your current house, then take your annual gross income, divide by 12, multiply that by 0.36, and subtract your monthly debts.
The lower of the two ratios is what you should base your budget on to calculate the maximum mortgage payment you can afford. We know it can be frustrating to have to work within these limits, but it’s better to choose a house that you know you can afford and to invest in that house for the future than to choose a house that will be a struggle to pay for and maintain your current standard of living.
2. Decide What Area You Want to Be In
There are a lot of neighborhoods to consider when you’re buying a home here you should consider your lifestyle and what area works best for you. If you are looking for great schools, you may want to go a little bit outside of downtown. If being close to restaurants and shopping is your thing, then you may want to look around the Crossroads District where all of the action is. Take a look at our guide to Kansas City neighborhoods for more information about what types of people live in each neighborhood.
3. Make a Checklist of What You Want—And What You Don’t Want
The more information you have before you start looking for homes in Kansas City, the less time you’ll have to spend figuring out what you do and don’t want. One of the first decisions you make should be the size and style of home you want, along with anything you absolutely have to have and anything you definitely do not want. You should also make a list of pros and cons for each home you visit and use it to update your house hunting checklists regularly.
Consult with a Local Real Estate Agent
Local real estate agents know the area because they live here and they love KC! Local agents also have a good understanding of the market and can provide important guidance you wouldn’t be able to find on your own.
Now that you know what to do before buying a home, you can get started looking for your dream home.
Let our team help you find the perfect home in Kansas City. Give us a call today! You can reach our team at 913.521.8806. Want to come and see us? Our office is conveniently located at 5000 W. 135th St. Leawood, KS 66224