How Much Can You Afford When Buying A Home?


Congratulations, my friend - you've finally decided to purchase a home, and you're probably trying to figure out how much to spend. Before you go home buying, you need to carefully consider what you can afford as far as a mortgage payment.

Mortgage Payments 101

If you are looking to figure out how much mortgage payment you can afford, you probably want to have a tete-a-tete with a mortgage lender. Then you will want to go to the process of applying for a loan, but only to the point where you are to get a pre-qualification letter. The pre-qualification letter will give you and the seller alike a figure, a cap for the amount of the home loan you could make.

Next rhetorical question - does having the loan in your possession mean that the amount on there would be how high you can go? The answer is maybe or maybe not. Remember that the prequalification letter is based on your credit and your monthly income - a slice of your life, but not your entire life. But it is not to be misconstrued as who you are - please do not resort to this pitfall!

Miscellaneous Expenses

Oh, the agony - that is the most common reaction of people who buy a new home while being strapped with monthly mortgage payments. Optimism is all well and good, but it must be tempered - remember not to think of the pre-qualification letter as gospel word. You may have purchased your dream home, but don't let the payments be a nightmare.

In determining how much you can afford to expend on a home purchase, you must consider your overall financial situation. Your financial situation may be copacetic as you speak, but there may be expenses to be made in the future that could unexpectedly tighten the belt. Here are some situations:

Are you planning to have more children in the near future?

Are your current children going to college soon?

If you own a business, is the financial outlook stable?

If you work for a company, are you reasonably sure the company is headed in the right direction?

And is the trend of downsizing causing concern for your business or the company you work for?

If you provide the only source of income, do you have any potential health problems or contingency plans should you miss some time at work?

These general questions are intended to wake you up to the possibility of over extending yourself on a mortgage. So before you commit to a mortgage, do not just think of the here and now - think of what the future may hold and see how you stand in life before making a decision.

Update your house's design for a fast transaction with kitchen contractor Riverside.