Buying a home is a large and substantial investment. A major factor in buying a home is the amount you are willing and able to afford. But how do you determine what price range is appropriate for you?Your house will likely be your biggest purchase, so figuring out how much you can afford is a key step in the homebuying process. Check out these tips! Click To Tweet
Calculate Your Income
The first step to determining what price range is right for you is calculating your total monthly income.
Totaling how much you and your family bring in every month allows you to get a sense of how much money you have to work with for all of your expenses.
Progress always involves risk. You can’t steal 2nd base and keep your foot on 1st.
– Fred Wilcox
Next, you should establish a budget. Begin by listing all of your fixed payments, meaning your monthly car payment, auto insurance, student loans, so on and so forth.
After listing all of these fixed payments, you should then list your non-fixed costs and budget appropriately. Non-fixed payments would include grocery bills, gas expenses, etc. These are bills you commonly have throughout the month. However, they do not have a set amount and can vary.
You can begin budgeting various expenses by keeping a tally on what you typically spend for these items. For example, if you generally spend around $100 on your weekly groceries, you should budget $400 monthly for your grocery bills.
Listing all of these expenses will allow you to better understand where your money is going and how much you have leftover.
Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.
– Russell Sage
Home Buying Tips and Tricks
While budgeting is a fantastic way to get started on being financially responsible for homeownership, you can also get a general idea of what you can spend on a home through a house payment calculator. Utilizing this useful tool will allow you to adjust numbers such as the home price, your down payment, the type of mortgage, and the interest rate.
Playing with this tool can help you understand how a lower down payment will result in a higher mortgage payment and vice versa. You can also add expenses such as property taxes and homeowner’s insurance into this tool.
Furthermore, you will be able to view the amount of interest you will pay over the time of the loan.
Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.
– Franklin D. Roosevelt
Consult with an Agent
Lastly, it is always wise to consult with a real estate agent to better plan out how you can become a homeowner.
Due to the agents' heavy experience in the real estate market, they can better help guide you and provide suggestions specific to your needs and circumstances to get you on the right path to owning a home.