How Much House Can I Afford?

Couple on computerCalculating how much house you can afford to purchase is one of the most difficult steps in the home buying process. It is an important decision, and one that takes some time to determine. Keep in mind that making a home purchase is a long-term commitment. You need to be able to afford the payments on your home today, next month, and years down the road.

If you have any major life events in the future that could impact your ability to make your loan payments (starting a family, or retirement, for instance), you will want to take this into consideration when making your budget.

These steps can help you land on a housing budget amount that will work for your family long-term:
  1. Create a budget. This is the best place to start. What are you paying today for housing, groceries, utilities, etc.?  Make a list of all your loan payments (auto loans, credit cards, etc.) and what you pay on them each month.  
  2. Research some home prices for homes you like in the area on Zillow, Trulia or any of the other home listing sites. Looking for a four bedroom, two bathroom home in Macomb Twp.? Research homes for sale in those areas and see how much they typically cost.
  3. Estimate your taxes and insurance in the area you're looking to move. You can contact your existing insurance company, or research a new one. You can even get a free home insurance quote online or via phone through Christian Financial's partner insurance agency, TruStage. To find an estimate of what the current owners paid in taxes for a property, visit this website. You'll be able to get property tax figures for many local cities.
  4. Calculate the housing payment for the amount you need for your desired home. This calculator can help give you an estimate of your total housing payment, including taxes and insurance if they are held in escrow.
  5. Evaluate your calculated housing payment against your budget. Including taxes and insurance, do you have enough money to make your payments each month, plus pay your other bills AND allow for emergencies? Great! If not, start over with a less-expensive home and try going through these steps again.
  6. If you're still stuck in the budgeting stage and not sure where to start, you can get free budget counseling from GreenPath as a benefit of membership. 
Posted: 9/30/2017 1:48:29 PM by Rebekah Monroe | with 0 comments