How Much House You Can Afford

how much house you can afford
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Buying a house is one of the largest purchases you’ll ever make, so it’s important to have a plan. If you’re wondering, how much house you can afford, here are a few tips to help you calculate your answer.

How Much House You Can Afford

Know Your Market

Before falling in love with a home, it’s important to be familiar with the real estate market where you are about to buy a home. Do some thorough research to determine the average cost of a home in the neighborhood you want to buy and nearby neighborhoods to get a good grasp on what prices to expect. This way, you can help avoid finding your “dream home” only to see that it’s in one of the higher priced neighborhoods that might not be in your budget.

Check Your Financial Situation

When figuring out how much house you can afford, start by looking at how much money you’ve saved. This can help you determine the max amount you can and want to put into your down payment. Second, be sure to collect the last couple bank statements and tax returns to send to your lender once you’re ready to get the ball rolling. Finally, think about your work history and if you have consistent income. Lenders like to see a steady work history (the same company for two years or more) to show that you’re able to pay a monthly mortgage.

Know Resources

When creating a budget, it’s important to include utilities, taxes, and insurance of your new home in addition to the base mortgage. Research the water, electricity, garbage, and sewer companies for the homes you’re really interested in to create an accurate representation of how much you’ll be paying per month. If you’re interested in moving to a neighborhood with an HOA, make sure to include this cost as well. Thoroughly doing your research can set you up for success and give you a clear answer of how much house you can afford.

Save For Décor and Updates

Unfortunately, payments toward your home don’t stop at the mortgage and utilities. Be sure to budget for home décor as well as any home updates you’ll want to complete when moving into your home. These costs are good to be aware of before closing on your home so you can be sure to save up for all you want to do once you become a homeowner.

You may also like: Simple Ways to Save for a Down Payment

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