For a new couple, it must be amazing to own your own property. But, before you browse around for your dream house, now first about how much house can you afford if you decided to buy. You don’t want to fall in love with a house that you can’t afford! It will be a true heartbreak.
That’s why it’s best to play it safe and only look around for things that you can buy. There is an easy way to estimate how much the price of property that you can afford. Read below to find out how.
Know The Rule
Everybody that has bought a house before will tell you to follow the 285/36% rule as their home affordability 101. What is that, you say? It’s a good remembrance to calculate the amount of debt that a household should take.
This means that the maximum amount that you spend on your house expenses is 28%. And 36% of your income is the limit of how much you can spend on your total debt. This includes your car loans, student loans, and other loans that you may have.
Know The Factors
To calculate how much you can pay for a house, you can use mortgage calculator affordability. Though, there are key factors that determine the home affordability. The first and most obvious factor is your income.
How much money you receive regularly plays a huge factor. This sets for a baseline of what you can afford to pay every month. If you have reserved funds such as savings, investments, or others can help you as well.
Not only how much money you have, debt or expenses that you pay are also one of the key factors of the home buying process. You have to think about these other obligations that you have to fill before taking a big mortgage.
But, the biggest factor that people would say is your credit profile. A good credit score and the amount of debt that you have left the matter to the lenders.
They will check and determine how much money you can borrow and your interest rate from your credit score.
Know The Tool
Using a tool like mortgage calculator affordability, you can get the best price range after you put all of those key factors. You will get the most precise number on how much you can pay for a house.
If you only use take everything to the bank, they won’t calculate on your saving and all. So, if you want to save a bit of money every month for your retirement, you won’t be able to allocate that.
Now, you know what kind of things that determine how much house can you afford with your financial status. Calculate those factors of your financial status using mortgage calculator affordability and start browsing around for your ultimate dream house.
We suggest that you do the calculation early on before you start the home buying process. It will be best if you apply a good saving plan and financial management that are good so you can save a lot of money to get the best deal instead of taking a mortgage loan.