How Much Home Can I Afford?
Posted by Shefali Raghav on
A home may be one of the biggest investment you'll ever make, and smart budgeting from the start can save you a lot of headaches as a future homeowner. Here are five questions to ask yourself to help determine just how much house your budget can buy:
5 Questions to Guide Your Search:
1. How strong is my financial history?
Make sure your credit score is in good standing before you set out to buy a home. The higher your credit score, the more likely you'll qualify for a lower interest rate, which could save you thousands of dollars over the life of your loan.
2. What mortgage product is right for me?
3. How much should I put down?
A 20% down payment will help you avoid private mortgage insurance (PMI), but waiting to save up for that down payment could mean you'll pass up good opportunities. Ask your loan officer about programs that have low down payment requirements (some require as little as 3%, and others 0%), Check out down payment assistance programs for first-time buyers and borrowers with low to moderate income.
4. What home price can I afford?
If crunching numbers isn't your strong suit, enlist the help of an online home affordability calculator (there are many resources available). Simply enter your annual income, monthly debts and expected down payment, and you can get a sense of the price range for a house that can fit comfortably within your budget.
5. What housing expenses should I include in my budget?
In addition to your down payment, mortgage principal and closing fees, you'll want to budget for interest, taxes and insurance. Don't forget to also account for utilities, HOA fees (if your neighborhood has one), repairs and regular maintenance.
Please click the link and download our PDF guide here: http://bit.ly/2riwQOA