Buying a home is exciting and emotional. The possibilities are endless and it’s so much fun to dream. But financial aspects can quickly damper your enthusiasm. It’s important to stay within your budget. So, how much home can you really afford? Consider the following.
What is your monthly income? If you have a salaried job, this can as simple to calculate as looking at your paystubs, but if you work on commission and tips, it’s important you consider both high income and low income months.
What is your monthly debt load and expenses? Consider the monthly cost of child support, alimony, student loans, credit cards payments, car loans, and other debts that must be paid each month. These expenses should include cable, internet, cell phone, gas, food, entertainment, clothes, travel, etc.
Is your job stable? Today’s job market is still a little shaky. While the unemployment rate has improved, many still struggle to find jobs. What would happen if you were to lose your job? Would you still be able to pay your mortgage?
How long will you be staying put? Homes just aren’t appreciating at the rate they used to. You will probably need to stay put for at least five years before you would break even on a sale.
How much do you have saved? Lenders expect for today’s buyers to have at least 20 percent to put down in addition to closing costs. A $200,000 house will require a $40,000 down payment. Do you have this money in addition to an emergency fund? If not, you might want to consider a less expensive house or waiting to buy.
Allowing your budget to determine the houses you view and the home your going to buy is a smart decision for your future. For more help on estimating your budget and price range for your new home, call Helen today at 847.967.0022 or email [email protected].