Have you ever asked yourself this question: How much home can I afford to buy? If you did, and are still wondering the answer, we’ll help to answer it here..

Figuring out just how much home you can afford is an important aspect of buying a home. You find a home you absolutely love and begin the whole loan process only to be disappointed because you simply cannot afford it. By figuring out how much house you can afford beforehand, you can avoid this disappointment and frustration..

The main factors you need to consider when looking at home affordability is your income vs. debt. We all know the importance of income, when it comes to borrowing; lenders want to know that you can pay your mortgage comfortably, while maintain your other debt. Essentially, no more than one third of your income should go towards housing costs. This applies whether you rent or buy. It is especially important if you are buying a home… using the 33% rule, you can calculate just how much home you can afford. You need to remember, that this is not only the mortgage, but also homeowners insurance and property taxes..

While your income and the actual housing costs are important factors you must consider, there is also the home loan itself. There are aspects of the loan that will have a direct relationship to how much of a house you can afford. Essentially, your goal in finding a mortgage should be to get the best interest rate for the long term. The mortgage rate will depend on many factors, many of which you have some control over. One of these factors is the number of points you pay on the mortgage. They are the fees you pay to the lender at the closing of the home loan. Many lenders will only advertise one loan rate based on a certain number of points. However, you can ask if there are other options that will lower your interest rate on the mortgage. In general, the more points you pay at closing, the lower the interest rate. This may be a good option for those who have some cash after the down payment and would like to lower their overall mortgage payments in the future. Paying fewer points may be attractive to those who don't have a lot of cash left over after the down payment..

You need to do a little bit of work in calculating how much home you can afford before shopping for a home. Make sure to consider your income, how much you have saved for a down payment, the amount of debt you have and the costs of insurance and taxes. By doing a little work, you will have a good idea as to how much home you may be able to afford..

Any of the professional full-time realtors at GayRealEstate.com will be happy to refer you to a reputable lender that can help you work through a pre-qualification before looking at homes ~ this will prevent any unwanted surprises..