“How much House Can I Afford?”

Even the most scrupulous of real estate shoppers has to analyze the question “how much house can I afford?” more than once in their buying career. And for the average buyer just looking to settle down and make their way in the world…asking this question of themselves can be the most daunting step in the home buying process.

When a real estate buyer is not necessarily prepared to make the purchase of a certain piece of real estate, and they have no idea what they can really afford, but they still proceed to hunt for a house anyway…things can easily get overlooked.

Finding Answers to the Question, How Much House Can I Afford?

Talk to the Professionals

It is very important in today’s market to meet with a qualified loan broker to determine how much of a loan you can qualify for and how much house you can really afford. Some general guidelines to consider when contemplating “how much house can I afford?”

Most buyers purchase a home that costs about one and a half to two and half times their current annual income.
Someone earning $100,000 a year might purchase a home for $150,000 to $250,000.
Mortgage payments should be about 26-28 percent of your gross monthly income. Existing debt is also considered in the mortgage process
Total debt payments (car payments, credit cards, student loans, etc.) should not exceed 40 percent of your gross monthly income.

Common buying mistakes can be avoided by setting a time frame. There are many variables in the home-buying process, which means that it takes time to find your dream home. A typical home search process may take three to four months, including the mortgage approval process, comparing and evaluating properties, making an offer, negotiating the terms and closing escrow. The loan to funding process, to close escrow typically takes 30-45 days.

The Lending Process

How Much House Can I Afford With A Decent Loan?

Understanding the answer to the question “how much house can I afford” is difficult for many home buyers because most of them do not understand or are very unfamiliar with the lending process. One of the most intimidating aspects of buying a home is the mortgage approval process. Here are some crucial points to remember when gearing up to get that loan

Make Sure Your Budget is Under Control- Evaluate your financial position thoroughly. You are going want to know exactly where ever dollar is coming from and where it will be going
Make a List of All Your Monthly Expenses- compare it with your income, and see if adjustments need to be made.
Start Gathering Documents– such as W-2 forms, income tax returns for the past two years, pay stubs, bank statements for the past several months, and your credit report.
Be Sure to Allow for Closing Costs. We encourage all Buyers to double app so it will allow you to compare loans and get the best deal.

What Type of House do You Want to Be Able to Afford?

Discover your Dream Home

A common buying mistake that buyers must refrain from doing is not knowing what they want and need in their dream home before they start actually looking for their dream home. Here is a list of simple pointers that will help you avoid this pitfall when searching for a home.

Make a list of “must-have” features -“Must-have” features may include the number of bedrooms and bathrooms you’ll need to accommodate your family, location (consider commute to work, which schools your children will attend, etc.), or a yard for kids to play.
Make a list of optional features you’d like to have– Optional features may include the architectural styling, bay windows, landscaping, etc.

Having a clear idea of what you want in a home will help your REALTOR® determine how much house you can afford, and before long you will be living in that perfect home you always dreamed of.

Thank you for tuning in to Manhattan Beach Properties, an informative real estate blog. Please contact our Real Estate Team for more information on how to use our expert services for all of your Real Estate needs. We are here to help you buy or sell your dream home.

FREE- search like a Realtor for FREE by signing up for a Listing book account at http://goldenfonoi.listingbook.com.