The Mortgage Roadmap

How Much House You Can Afford?

29th September, 2010 - Posted by admin - No Comments

Before shopping for a new home, potential home buyers should have a clear picture of exactly how much house they can afford. Shoppers often have waterfront New Jersey condos in mind when the budget actually suggests a small suburban bungalow. Figuring out your house purchasing budget is an important first step when shopping for a new home.

Doing the Math

To get a rough idea of the amount you can afford to borrow, multiply your annual salary by two and a half, but remember that this amount is only an estimate. Try using one of the many mortgage calculators found on the Internet. Be honest with yourself as you list debts and expenses. Buying a house you can easily afford will allow you the financial breathing room to enjoy your new purchase.

Getting Your Ducks in a Row

Every home buyer wants the best financing deal they can find. The larger your down payment the smaller your loan will be, so bumping up the amount you are saving toward your down payment is always a good idea. Check your credit report and fix errors now. If your credit score is lower than you might have hoped, start implementing measures that will improve it. Your credit score is used to determine your interest rate, which will affect the amount of your monthly payment.

The Small Details

There are many unexpected expenses involved in buying a home. A home inspection is a good investment, but it does cost money. You may be required to buy a full year of home owners insurance before you close, which can be quite expensive. Homeowners associations may require extensive landscaping within three months of closing. All these expenses can quickly add up, so prevent unpleasant surprises by understanding exactly how much you need to not only buy your home, but to move in while staying within your financial comfort zone.

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