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Determine the House You can Afford



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By : Sonia Smith    99 or more times read
The price of a home you can afford depends on many factors. Home buying is more than saving for a down payment and the amount of money you can afford for a home mortgage. It does not mean that if a lender tells you that you can borrow a large amount to buy a home that you should.

Bear in mind that buying a home is not your only financial goal or obligation. Take into consideration you retirement funds, education for your children and vacations. Committing your every dollar to a home purchase can lead to financial difficulties if you do not weigh your options carefully.

Following is a guide to help you determine the amount of money you can afford to buy a home.

  1. Before you go home hunting, it is important that you get an estimate or assessment from a mortgage lender of the amount that you can borrow and if possible, you should get a preapproval. This will help you save time in looking for homes that are within your price range. Furthermore, you should have a good credit score and report in order to qualify for a mortgage. Many mortgage lenders will assess your total monthly income and total monthly costs. Your debt-to-income ratio should also be determined, like your loan payments, credit card bills, car loans, student loans and many more.

  2. Ascertain the home cost and the cost of owning it. You have to consider the amount of your down payment for a home. If you put less than the usual twenty-percent of the purchase price of a home, you have to pay more for the monthly payments. Additionally, you must allocate funds to pay for the closing costs, which is normally between 2 to 5 percent of the purchase price, such as home inspections, lawyer’s fees and home inspections. You should also consider how much you would have to spend for any home repairs or renovations.

  3. You should be able to make an estimate of what your monthly bills will be and try to live within three months as if you have to make the monthly payments already. This strategy will help you get a good sense of how your cash flow would look like with a home mortgage and you can save more money towards your new home by distinguishing between your current home payments and your prospective new property.

  4. Look for homes that are a little bit lower in cost than you can afford. Remember that real estate agents will tend to show you more expensive homes than the price you state, thus it is better to set your price lower. In this way, if you tell your agent that you will only spend $275,000 for a home and nothing more but he or she shows you a home that is more than your price range, you have allowed room for yourself to negotiate the home price.

  5. You can also use a financial calculator to help you determine the amount home that you can afford. You can simply enter your debt, income, mortgage and taxes and it can provide you a calculation of the home you can afford. There are also many resources online that could help you.
Check out these townhomes for sale in Ahwatukee Condos for Sale, find homes with views in Ahwatukee Homes with Views or rent homes in Ahwatukee Rental Property.

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