How much can you afford to buy?

Unless you are buying cash, the first thing you need to do is see how much you can afford to spend by speaking with a reputable lender. This will help you establish a budget that will help you know how much property you can buy. Knowing your price range will help focus your house-hunting.

How much you can afford to buy depends on two things: how much you can afford for the monthly housing payment, and how much you can invest in the down payment. Monthly payments include principal, interest on the mortgage loan, property taxes and insurance against fire and other hazards. These four costs are often abbreviated "P.I.T.I.". For some buyers and lenders, monthly housing costs may also include homeowners association dues, condominium fees, and mortgage insurance.

The potential mortgage financing you can obtain is the single most important element to help you determine how much you can spend on a property. Once you establish housing budget, and have the lender pre-approve you, then you are in a position to comfortably begin to look at property.

If you do not have money for a down payment, you may be able to have your parents help you. There are also special programs by jurisdiction for different types of buyers that may minimize down payment requirements.

If needed, you may be able to borrow against a stock portfolio or life insurance policy, as well as sell off either stocks and/or bonds.

Remember that in addition to your down payment and monthly payments, you will need money to pay for closing costs, moving, appliances, household setup, a reserve for family emergencies, and other miscellaneous items. So don’t plan to put your last penny down on the closing table.

To make sure you get the right loan for you, Contact us now to help you work with a Realtor that can help you make prudent decisions with which you can live comfortably today and tomorrow.