Figuring out the amount you can spend on a new home can seem complicated. Depending on your financial background, financing a home may get a bit overwhelming. I’m here today to help you get a better grasp on the amount you should spend when buying a new home.
If you are getting an FHA backed loan, your monthly finances for your housing cannot exceed 31% of your monthly income. It is suggested that you stay near 28% of your monthly income, just as a safe bet. There are more factors than just the mortgage you will need to consider.
Totaling the monthly costs of your home, you will also want to consider things like property taxes, month to month utilities and insurance. This will give you a more complete picture as to how much you will be spending monthly your home. One way to test if you can truly afford something is to try doing a test run far prior to when you are buying a home.
You can do this by stashing away monthly what you believe would be the cost of your home. By doing so, you will see the impact this will have on your quality of living while being able to start building up your nest egg.
Depending on your credit may also impact what you can afford or even be approved for. The higher your credit, the better you chances of getting a better APR on your home loan. Currently, the rate is between 3.91 to 4.53% according to bankrate.com.
The key to buying a home and making it affordable is foresight. It is best to plan wisely and be cautious with your money. Make sure you are meeting your monthly obligations in order to build your credit overtime so when you are looking into home buying you have a better chance at getting the home you want at a price you can afford.
If you are looking to purchase a home and live in the Encinitas area, I’d be happy to help. Give me a call or send me an email about your specifications for a new home.