Financials are the first thing you should take care of when deciding on your range of houses and how much to take out on a loan. Traditionally, a good range to use is 25-30% of your income. Depending on your personal circumstances, it could be less, but going over 38% is never recommended. Some also say using 3 years worth of income is the best decision, but incomes sometimes level out differently especially if you get a raise each year or if you are a business owner and it fluctuates greatly.
In factoring in
how much house you can afford to purchase please calculate in all of the expenditures you have now. This will include, but is not limited to, car payment and insurance, maintenance for vehicle(s), student loan payments, food and dining, clothing, toiletries, money for any travel necessary for work, health insurance, credit card payments, and savings if you have a plan for savings you are unwilling to budge on (which I suggest).
Other factors that will need to go into your home that may increase when you enter the home is electricity, water, gas, decoration, maintenance, and a home alarm system (which again, I strongly suggest). Although you will not know what the particular costs of the utilities will be in a home, since it may be larger than the apartment or rental home you are living in now, the best way to go about it would be to inquire to friends and family homeowners as to what they pay for each utility on average. If this option is not available, it would be best to factor in what you pay now and budget a 1/3 more for each utility. After your first and second utility payment you will better be able to estimate how much utilities are and can go from there.
New bills that you will have to factor in with a home may be the HOA fees, yard maintenance, furniture and appliances, as well as any fixing that the house may need. These new costs will depend of the type of house that you choose as well as the neighborhood, because some communities have HOA fees and others do not. Some HOAs also take care of lawn maintenance and others leave the care of your home to you. These are good questions to discuss with your realtor before looking at homes.
It is no secret that while homes are an asset they can seem like a money pit. This is why making wise financial decisions regarding how much
mortgage and home to purchase are crucial to your wellbeing. You do not want to enter a situation where you are struggling to pay for your home and have personal issues arise, that you cannot afford to take care of. Homeownership should be an asset to you and not a liability that you feel laboriously binds you. Stretching yourself thin with large mortgage payments will prove to be more stress than the initial euphoria of the house was worth.
In the end, only you can decide how much mortgage you can and are willing to pay. Be sure to factor in all current and future commitments that the house will need, as well as a savings plan. Take this information to a financial advisor you trust to help you work out the kinks, and this is your first step to figuring out your mortgage loan! Be a step ahead and good luck!
