Purchasing a home is a huge investment and a big decision! One of the questions I get asked often is, “How much house do you think I can afford?”
Your buying power is generally based on:
- Current debt
- Credit score
- How much you have for a down payment
- What kind of property you’re interested in
- The area you’re looking in
That’s a lot of different factors! To get you on the road to figuring out how much you can really afford in Phoenix, here are some helpful tips and tools:
Set A Realistic Monthly Budget
The percentage can vary, but most experts agree that you should spend no more than 20-30% of your total monthly income on mortgage costs. That leaves you well balanced for other expenses such as a car payment, necessities, utilities, other debt, savings, and, don’t forget… maintaining the home when things need fixing!
To get an idea of how much you can afford, try our “Discover Your Buying Power” tool.
Determine Your Down Payment
Generally speaking, the bigger the down payment, the more home you can afford. You’ll need to consider whether you’ve saved a chunk of money for the down payment or if you’ll use money from the sale of another home. Ideally, you will put down 20% of the cost of the home to avoid paying additional insurance premiums. But there are plenty of loan options out there that can help those with little down payment amounts too.
Figure Out the Maximum House Price For Your Budget
Now that you know the maximum monthly amount you can set aside for a mortgage and how much you have for a down payment, start crunching some numbers.
By using our mortgage calculator, you can start getting an idea of the loan amount you can afford.
Hire the Pros
After getting an estimate of your buying power, it is time to start getting serious about finding a new home! You’ll need a strong team of real estate agent and loan officer for the buyer’s advantage. If you’re ready to get started, ask me for a free consultation.
I’ll be happy to crunch the numbers for you and work with you along the way to your new home.
Sources: The Wall Street Journal, Interest.com, and Salted StoneQuestions? Contact David Krushinsky Today!