How Much Can I Afford?Monday, October 28, 2013 - Article by: sharon duffy - 7th Level Mortgage -
The first step to buying a house or condominium is figuring out how much you can spend. Coming up with the number is an exercise in basic math. You look at your income, your debt, your monthly expenses, and also your comfort level.
Whenever I begin to work with a new client, I have them answer two questions: "How much do you want to pay each month for your mortgage, and how much do you have available for your down payment and closing costs?" And, using the current interest rates, I translate that into a mortgage amount plus their cash on hand to determine the home purchase price that will work. Interestingly, most lenders virtually always will agree to lend the buyers a lot more than they would be comfortable paying back!
mortgage paymentproperty taxescondo or home owners association feeshomeowners' insuranceutilitiesThen look at other financial commitments you might have. Some example are:
Credit Card debtCar paymentsStudent loan paymentAlimony or child supportThen you will need to think about your overall life style. Do you have children who will be headed to college any time soon? Do you send money to help support elderly parents? Do you like to eat out a lot or travel to exotic lands? While your lender might not take these expenses into account, you probably should.