Buying A Home That You Can AffordMonday, January 19th, 2009
The first thing to do when shopping for a home is to find out how much house you can afford. In general, you will need to look at your gross income, your credit history, cash on hand for a down payment and closing costs, and don’t forget about your debt. Here is the rule: how much you earn compared to how much you owe will determine how much you can borrow.
A simple formula is to determine your gross monthly income and your monthly debt and make sure that your total debt does not exceed about 36% of your gross monthly income. Keep in mind that every situation is different and each lender has their own rules and regulations. To determine the maximum amount you can borrow talk to a mortgage professional. Once you know this amount you can add it to your down-payment to get an approximate home purchase price range.
The home buying process is a complex transaction. Get the true facts for buying and selling a home in today’s slipping economy. For a free consultation regarding any aspect of real estate, please contact me.