Easy and effective ways to determine how much home you can afford

One of the principal questions that most of the prospective homebuyers have is ‘how much house can I afford?’ in reality. It is a fact that housing prices are low in 2010. But, it is also true that thousands of homeowners are losing their cherished homes to foreclosure. That is why it is necessary to know whether you can really afford to buy the house so that you don’t have to go through the humiliating process of foreclosure.

Ways to determine how much house you can afford:

The easy and effective ways to determine how much house you can afford are given below:

  1. Housing expense ratio: The housing expense ratio, also known as front-end ratio, is the percentage of your gross monthly income that will go towards paying your mortgage/ housing expenses. A major portion of your payment will go toward loan principal and interest (P+I).Your housing expenses have to be within 28% of your gross monthly income. However, a portion of your housing expenses will also include property taxes (T) and homeowner’s insurance (I). Thus, your total housing expenses can be represented as P+I+T+I. This is a smart way to know ‘how much house can I afford’ easily.
  2. Debt-to-income ratio: Your debt ratio is the total of your P+I+T+I and any other debt expenses divided by monthly gross income. Debt ratio will evidently be of higher percentage, as majority of people have credit card debt or other loans. Normally your debt ratio ought to be less than 36%. For example: If your monthly gross income is $5,000, then your total debt expenses must not be more than $1,800.
  3. Down payment: If you can’t afford to put down at least 20% of the home purchase price, then you will be required to buy a private mortgage insurance (PMI). Therefore, check whether you can make the required down payment.
  4. Home maintenance expenses: Most of the first time homebuyers don’t think about this but the fact is you will have to keep some spare cash for home maintenance cost. You will also be required to keep some extra cash for unforeseen expenses such as appliances break down, replacing carpets, renovating kitchen, remodeling bathroom, and etc. So check whether you can afford to bear those expenses.

Finally, the homebuyers may also be required to pay Homeowner’s Association Fees. So, another way to know ‘how much house can I afford’ will be to figure out the amount of money you have to spend towards Homeowner’s Association Fees.

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Easy and effective ways to determine how much home you can afford

One of the principal questions that most of the prospective homebuyers have is ‘how much house can I afford?’ in reality. It is a fact that housing prices are low in 2010. But, it is also true that thousands of homeowners are losing their cherished homes to foreclosure. That is why it is necessary to know whether you can really afford to buy the house so that you don’t have to go through the humiliating process of foreclosure.

Ways to determine how much house you can afford:

The easy and effective ways to determine how much house you can afford are given below:

  1. Housing expense ratio: The housing expense ratio, also known as front-end ratio, is the percentage of your gross monthly income that will go towards paying your mortgage/ housing expenses. A major portion of your payment will go toward loan principal and interest (P+I).Your housing expenses have to be within 28% of your gross monthly income. However, a portion of your housing expenses will also include property taxes (T) and homeowner’s insurance (I). Thus, your total housing expenses can be represented as P+I+T+I. This is a smart way to know ‘how much house can I afford’ easily.
  2. Debt-to-income ratio: Your debt ratio is the total of your P+I+T+I and any other debt expenses divided by monthly gross income. Debt ratio will evidently be of higher percentage, as majority of people have credit card debt or other loans. Normally your debt ratio ought to be less than 36%. For example: If your monthly gross income is $5,000, then your total debt expenses must not be more than $1,800.
  3. Down payment: If you can’t afford to put down at least 20% of the home purchase price, then you will be required to buy a private mortgage insurance (PMI). Therefore, check whether you can make the required down payment.
  4. Home maintenance expenses: Most of the first time homebuyers don’t think about this but the fact is you will have to keep some spare cash for home maintenance cost. You will also be required to keep some extra cash for unforeseen expenses such as appliances break down, replacing carpets, renovating kitchen, remodeling bathroom, and etc. So check whether you can afford to bear those expenses.

Finally, the homebuyers may also be required to pay Homeowner’s Association Fees. So, another way to know ‘how much house can I afford’ will be to figure out the amount of money you have to spend towards Homeowner’s Association Fees.

4,125 Responses to Easy and effective ways to determine how much home you can afford
  1. Facebook Auto Likes
    February 15, 2019 | 1:13 am

    Good day! I know this is somewhat off topic but I was wondering which blog platform are you using for this site? I’m getting sick and tired of WordPress because I’ve had problems with hackers and I’m looking at alternatives for another platform. I would be fantastic if you could point me in the direction of a good platform.

  2. Instagram Likes
    February 15, 2019 | 5:30 am

    I am very happy to read this. This is the kind of manual that needs to be given and not the random misinformation that is at the other blogs. Appreciate your sharing this best doc.

  3. Pedro
    February 15, 2019 | 6:44 am

    Traders do pay direct and indirect costs.

  4. west palm personal injury
    February 15, 2019 | 8:38 am

    Thanks for sharing this excellent piece. Very interesting ideas! (as always, btw)

  5. مترجم sex محارم
    February 15, 2019 | 9:01 am

    please visit the web-sites we follow, such as this 1, because it represents our picks through the web

  6. Join Bhim Armay
    February 15, 2019 | 9:41 am

    I rattling pleased to find this web site on bing, just what I was looking for : D besides bookmarked.

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  2. Gamiss womens clothing
  3. harman kardon india
  4. Sex Store
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Leave a Reply


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