How Much House Can I Afford?

Trying to figure out how much house you can afford is a big part of the home buying process.  To determine that you must have a clear picture of your income; debts, down payment and what level of payment you think you might be comfortable with are all important factors when determining how much house you can afford.

mortgageHere’s a simple tip that most people leave out; when determining the level of house payment you think you might be comfortable with make sure you know that amount includes estimated property taxes and insurance.  Why?  Well because that is a part of the cost associated with owning a home that needs to be factored in since it’s not something associated with when you pay rent.  So for example; if you say “A $1,500 a month mortgage payment is something I can afford” keep in mind that $300-$500 may go towards property taxes and insurance (even if you don’t set up an impound account).  If you don’t include an amount for your property taxes and insurance you’re avoiding the true cost of your home and that can be dangerous.  FYI – all lenders factor into your Debt-To-Income ratio the property taxes and property insurance associated with the home in determining how much you can afford.

The best thing to do is to contact an experienced loan officer at a reputable mortgage company (that has a top rating with the Better Business Bureau) that can help you determine how much house you can afford.  A loan officer can also have you pre-approved and it should not cost you a single penny.  If you are First Time Home Buyer (FTHB) then it’s even more important that you contact an experience loan officer to help you determine the amount you qualify for when it comes to getting a new mortgage.