When looking to buy a new home, it’s important to understand how much you can afford and how to go about determining this! The first thing you have to do is consider your monthly income (and your partner’s income if you’re living with someone) and use that figure to determine your maximum mortgage payment. Second, you’ll want to factor in any additional costs such as homeowner’s association fees into the total cost! Lastly, you’ll want to determine which mortgage option is right for you and get pre-approved for a mortgage!
It may seem obvious, but knowing your income and how much of a mortgage you can afford is the first step when viewing the financials of buying a home! Once you have the income available to you determined, multiply that number by 25% to determine what your maximum mortgage payment is! Once you have this number in mind, you can use a mortgage calculator to understand what mortgage option is right for you! Just be sure to keep in mind that the additional cost of property taxes and homeowners and insurance will affect the overall cost number!
Don’t Forget Additional Costs
Buying a home is often the largest expense that you’ll incur during your life, and the overall cost can cause you to overlook some of the important, but smaller costs that can add up! For example, you’ll want to consider things like utility costs, regular maintenance and upkeep costs, furniture costs if the home is not furnished, and homeowner’s association fees to name a few! Often times homebuyers will see the price of their home and their monthly payment and forget these other important expenses!
Determine which Mortgage is Right for youOnce you’ve determined how much you can afford and what additional costs are going to be added in, you should consider what mortgage option is right for you! This means understanding how long you plan to spend paying off your home, and the down payment that you put down affects your mortgage! If your down payment is less than 20% of the sale cost of your home, then you’ll also be paying for private mortgage insurance. As such you’ll want to determine what you’re able to pay and how this will affect future payments on your home!