How Much Mortgage Can you Afford ?
If you’re thinking of buying a home then you’re probably looking forward to the dream of homeownership. But, first you must determine how much home you can afford to buy.
Before you do anything else, make a detailed list of your finances. You’ll need to factor in all your income, and list all your normal monthly debts. Make a separate section for things you don’t want to do without, but can if it's required. These are the first things that are eliminated when looking to save money in your budget.
Next make a budget for your household. Remember to include extras like going out to eat. A good budget will have all of these elements:
Fixed expenses. These include food, clothing, housing costs, car payment, even taxes that are regularly billed are included in this category.
Retirement. At least 10% of your income should go into a retirement account.
Savings. This is any money that has been put aside for big purchases, to pay off debts, or for home repairs. Your savings budget should be 20% of your income.
Miscellaneous. You should put 10% away to cover entertainment expenses. Going out to dinner and a movie would come out of this section.
Most finance experts will recommend that you don’t spend more than twenty-eight percent of your income on housing costs. Still, some lenders may offer loan packages that are more than what you have budgeted to spend. No matter how great that Chattanooga condo deal sounds, you need to stick to your budget.
Once you know how much you can afford to pay for your Chattanooga condo, you can shop around for the best mortgage rates and loan terms for your personal situation. With careful planning, you can avoid making a mortgage mistake, and getting more house than you can afford.
Need more help determining how much mortgage you can afford? Give me a call today at 423-488-1882 or email me at travis@travisclosehomes.com . You can also reach out to one of my preferred lenders and they can help you.
