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.

2,720 Responses to Easy and effective ways to determine how much home you can afford
  1. summer clothes
    October 19, 2018 | 3:05 am

    I really wanted to post a simple comment in order to thank you for those precious instructions you are posting at this website. My long internet investigation has at the end of the day been compensated with excellent know-how to share with my pals. I would suppose that most of us site visitors actually are very much blessed to live in a useful network with so many awesome professionals with useful ideas. I feel quite happy to have come across your entire web pages and look forward to tons of more fun times reading here. Thank you once more for everything.

  2. UsefulTunde.com
    October 19, 2018 | 3:12 am

    Wow, marvelous blog layout! How long have you been blogging for? you make blogging look easy. The overall look of your website is fantastic, as well as the content!

  3. lightning nodes
    October 19, 2018 | 5:02 am

    I was suggested this website by my cousin. I am not sure whether this post is written by him as no one else know such detailed about my problem. You are wonderful! Thanks!

  4. Agen Poker Online
    October 19, 2018 | 6:54 am

    Thanks for the post.Really thank you! Really Great.

  5. web design software
    October 19, 2018 | 7:42 am

    check beneath, are some entirely unrelated websites to ours, having said that, they’re most trustworthy sources that we use

  6. La Manga Club Property
    October 19, 2018 | 8:44 am

    wonderful points altogether, you simply gained a emblem new reader. What could you recommend in regards to your publish that you just made a few days in the past? Any certain?

  7. Costa del Sol Property
    October 19, 2018 | 10:32 am

    Usa Online Casinos view of Three Gorges | Wonder Travel Blog

  8. Power Efficiency Guide
    October 19, 2018 | 12:19 pm

    Richard Goozh What are the most popular blog sites in the Philippines where I can submit my blogs for others to read?

  9. Easy Cellar Reviews
    October 19, 2018 | 2:03 pm

    It as in reality a nice and helpful piece of information. I am glad that you shared this helpful info with us. Please keep us informed like this. Thanks for sharing.

  10. เสื้อผ้าคนอ้วน
    October 19, 2018 | 3:47 pm

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  11. The Woman Men Adore Book
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  12. Candida Grounds
    October 19, 2018 | 5:36 pm

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  13. royalbola.tk
    October 19, 2018 | 6:17 pm

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    particular subject, however, you seem like you know
    what you’re talking about! Thanks

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  14. pinjaman wang koperasi kerajaan
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  16. Tech In Expert
    October 20, 2018 | 1:39 am

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  17. Kaye Fabiani
    October 20, 2018 | 2:52 am

    Hello there! This is my first visit to your blog! We are a group of volunteers and starting a new project in a community in the same niche. Your blog provided us valuable information to work on. You have done a marvellous job!

  18. Houston Ensel
    October 20, 2018 | 5:34 am

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  19. The Almost Done
    October 20, 2018 | 7:59 am

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  20. 2019 jamb questions
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