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Today’s topic involves financial planning when buying a home. We suggest breaking down a budget to avoid difficulties in the future. Firstly, ask yourself the following four questions to help determine your personal budget.
- How much can you afford to spend on a home?
- How much is a comfortable monthly payment?
- How much would a bank be willing to lend you on a monthly basis?
- How does that amount of the bank translate into a listing price?
Next, we have suggestions for you to keep in mind when determining your budget. Here is our advice:
- Take your overall income and remove your expenses. Identify monthly expenses and add them all up. You’ll want to include anything that might show up in your credit report such as a car payment, student loans, or credit card debt. Subtract those expenses from your total income.
- Banks lend approximately forty percent of available income. Leftover income goes towards a housing payment.
- For every seven to eight dollars spent monthly, you have a thousand dollars towards your home. For example, if you want to buy $100,000 home, you’d want a $700 or $800 monthly payment ideally.
If you have any questions about the buying process, or if you need real estate assistance of any kind, please don't hesitate to reach out to us. We would love to hear from you!
