answers to all of your home mortgage questions

« Back to Home

3 Tips For Choosing A New Home That You Can Afford

Posted on

If you are in the market to purchase a new home, you're probably pretty excited about owning your own property. To ensure that you continue to enjoy your new home after you buy it, however, you have to ensure that your purchase a home that you can actually afford. Luckily, following these three tips can help you purchase a home that you will love but that won't leave you struggling when it's time to make the monthly payments.

1. Look at the Numbers

First of all, you should look at your income and your budget and determine how much house you can afford. There are a lot of standards in place for the mortgage industry -- one common number that is thrown out there is 25 percent, which means that your monthly mortgage payment should not be higher than 25 percent of your monthly income, including taxes and insurance. Your lender can talk to you about the calculators and figures that it uses. Also, make sure that you leave yourself a little bit of leeway, particularly if you have a lot of other bills, like vehicle payments.

2. Determine Your Budget Before You Start Shopping

Don't make the mistake of shopping for a new home before you have sat down, created a budget and come up with a maximum amount that you can afford. It can be easy to fall in love with a home and to try to finagle the numbers or justify the purchase of a home that you really cannot afford. If you never look at homes outside of your price range, however, this won't be something that you have to worry about. Make sure that your real estate agent knows your budget and that you stay firm about not viewing homes above this amount.

3. Be Willing to Think Outside the Box

To find a home that you will love and that you can afford, you may need to think outside of the box. Although you might think that you know exactly what kind of home you want and what neighborhood you want to live in, this might not be realistic with your budget. Consider looking at homes outside of town, smaller houses, fixer-uppers and even manufactured homes. By viewing a lot of different types of homes within your price range, you can get a better idea of your budget, and you might find your dream -- affordable -- home in an unexpected way.