Best Methods To Determine How Much To Spend On A House
Posted on: 12 February 2020
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Are you hoping to buy a house soon but trying hard not to break your budget? It is important to fully evaluate your budget and the costs of buying and owning a home before you choose one to buy, as this will help you protect your finances. In fact, here are three great methods you can use to help you determine how much to spend on a house.
Get Preapproved
One method you can use to figure out how much you should spend on a house is going to the bank to get preapproved. The preapproval process is essential before shopping for a house, and it is quite helpful in determining how much you can afford to spend on a house. Through a preapproval, you will learn if you can get a loan, and if so, how much you can borrow. This offers a great starting point for you in your quest to set a budget for your home purchase.
Add Up All Costs of Homeownership
The second method to use is adding up all the costs of homeownership, and this might be easier if you have owned a home in the past. If you have never owned a house, there might be a lot more expenses with owning a home than you think. Some of the expenses to account for are your mortgage payments, homeowner's insurance premiums, and property taxes. You will also be responsible to pay for all the utilities at the home, all the repairs, and all the updates and work the house needs. These expenses add up quickly, and there are more than you would think, which is why this is such an important step to take before you buy.
Borrow Less than 28% of Your Gross Monthly Pay
Finally, you may want to consider using a percentage method to determine the amount you can afford. To do this, multiply your gross monthly income by 28%. This will tell you the amount you should be able to afford to pay per month for your mortgage payment. If you want to play it really safe, though, you might want to make sure your mortgage payment is even less than this, though.
Performing calculations and research prior to buying a house will help you choose one you can afford, and this is so important when buying a house. To learn more, talk to your real estate agent to learn more about the single-family homes for sale within the budget you have.