How Much Home Can I Afford?
After you have decided it is the right time for you to purchase a home the next step is deciding, how much home can I afford? Most lenders suggest you spend no more than 28% of your total monthly income on your mortgage, this number should include principal, interest, insurance and taxes. If you don’t include all of these numbers in your figures you may run into trouble.
Other things to consider are increased electric, gas and water payments, if you are moving from an apartment, you may need to pay someone to take care of your yard. If you are moving further away from your work, then there will be more gas and maybe toll road fees. Careful budget planning will always save lots of pain in the end.
Smart Money has created an online calculator to help you figure how much house you can purchase.
Another thing to keep in mind is the down payment and the cash you will need at closing. You will definitely want to speak with a loan officer to find out how much you will need to put down on your home. And there will be closing costs, sometimes these can be added to your loan, this in another thing to ask your loan officer. You can plan on 2% to 3% of the house price for your closing costs. Also, don’t forget moving costs and anything you may need to do to the home you purchase, also there could be monthly homeowners association fees and or maintenance fees.
Now that you have a good understanding of your comfortable price range start looking at the market, drive around and see where you would like to live, make a list of what is important to you, like a big back yard, proximity to schools and work, number of bedrooms, do you want a pool, do you want a lot with trees…
Remember that the price listed on a home is not usually what it sells for, except in certain markets, usually agents and sellers add a little room for negotiation. Agents use comparable home sales within a neighborhood to determine the value of a home. You can go online and search the appraisal district in the county where the home is to get some idea, keep in mind these are usually lower than actual value.
Happy Homebuying!
And remember, when you are ready to move home or office we would love to help. Get a free online quote today.
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