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How Much House Can You Afford?

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By : Roby Hicks    99 or more times read
Identifying the property you can afford is essential when planning to purchase a property. This will help you make decisions. With this, you will know your price range. You will also know the type of home you can afford and where to find it. You will not waste your time checking the property that is beyond your price range. This will also save you from frustrations. Finding your dream home and realizing that you cannot afford it can be very disappointing. This will also save you from financial trouble in the future as well.

It is essential that you know your price range so that you will have an idea of the financing you will need. You have to assess the amount of property you can purchase because this will greatly affect your financial state in the future. If you made a mistake, you could end up facing foreclosure issues and worst, end up bankrupt. Keep in mind that if you purchase a property, you should consider other expenses. You have to pay the bills and settle unexpected repairs. Here are some guidelines you can use:

1. Determine the value of the houses today. You can find out about this through the local papers. You can also visit different real estate sites. Once you have it, look for the property you will most likely buy. How much does it costs? After that, identify the 80% of the value. This is the case because most lenders would require a 20% down payment. Pick different homes with various prices so that you will have options.

2. Using the value you have generated, find out the mortgage payment it will require. You can use online calculators or software intended for this. You can also call lenders and ask their estimates for the amount you have determined.

3. Once you have a rough estimate of the mortgage payment, remember to add other values needed for the purchase. These are taxes and insurance such as the Private Mortgage Insurance or the PMI. You will incur these expenses when you purchase a property. There are utility costs as well. Ask your family or friends about the amount they are paying for this so that you will have an idea. You can also contact a real estate agent to ask for a more accurate estimate.

4. There are also maintenance concerns you have to deal with. So remember to include that in your budget. Determine this by multiplying the value of the property by 1%. When you have the result, divide it by 12. That will be your budget for the monthly maintenance repairs. In addition, you also have to include the values for home improvements such as furnishing and landscaping.

5. Once you have collate all the expenses you will incur each month, compare it with your monthly earnings. If the value is less than or equal to the 40% of your monthly income, the property is within your budget.

You have to know how much property you can afford before considering property to buy. Through this, you will know what property to purchase. This will also prepare you with expenses you have to deal with once you purchase a house.
Consider Casa Grande Homes for Sale for your next purchase. There are also wonderful Foreclosed Homes for Sale in Casa Grande AZ and Commercial Property in Casa Grande AZ.

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