Finding a Home Within Your Budget

What's Your Budget?
To determine the budget, you are basically asking the question, how much mortgage can I afford? See our article on “Six Steps to Qualifying for a Loan” in order to calculate how much mortgage you can get. Things that go into this are the down payment you have, the current other debts (car, etc) that you carry, your monthly income, and the type of mortgage you can find (term, interest rate) that gives you the monthly rate you determine.

Typically, lenders like to see that your mortgage payment is less than 28% of your gross monthly income. So if you earn $5,000 per month, the maximum mortgage payment would be $1,400. Ultimately, the down payment influences the mortgage rate and amount, and vice-versa. TotalMove offers a suite of calculators to help you crunch some of these numbers. Additionally, any lender or mortgage broker will be happy to work with you to explore your options. Today, there are many mortgage products to choose from, explore the various options from the traditional 30 year fixed to the multitude of adjustable loans. Each type has many different features and costs associated with them, so understand how they work and pick the best one for your situation.

So How Much House Can You Buy With That?
Once you know how much mortgage you qualify for (See article, Six Steps to Qualifying for a Loan), then you can shop for a house within your budget. You probably have a minimum expectation on house size – “I need at least three bedrooms, two bathrooms, and a family room.”

Now is a good time to put your agent to work. Tell your agent your budget constraints, and see what recommendations he or she has. Suggestions might range from different towns and neighborhoods to different property types, e.g., considering a condo or townhouse instead of a single family home.

But it is also a good idea to not just rely on your agent. Do your own homework - research homes for sale on the web, visit open homes, and explore new towns or neighborhoods that may accommodate your budget constraints.

Finding the House You Can Afford
Remember, you have two tasks: finding a mortgage to buy the house, and finding the house itself. These may be challenging at first, but when you are all done the reward of home ownership more than makes up for the effort. Good luck on your hunt!