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Before you begin looking for For Sale signs on
houses, do your homework to know what you can afford to spend
on a home.
Review your budget and determine how much you
want to pay each month. Lenders will consider the home's sale
price and your downpayment in determining how much to loan you,
but you need to determine how
much you feel comfortable paying each month.
In addition, remember that housing costs are usually
more than just mortgage principal and interest; they often include
property taxes and insurance.
As a general rule, your monthly housing cost should
not exceed 28 percent of your gross monthly income. If you have
other long-term debt (car payments or credit card balances),
that monthly debt plus your
house payment shouldn't be more than 36 percent of your monthly
gross income.
Since many lenders offer mortgage preapprovals,
you might want to meet with a lender early in the home-buying
process, so that you know what size loan you qualify for.
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