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How Much Home Can I Really Afford?

peterprealty

Maybe this has happened to you.... You get pre-approved for a loan and it is higher than you expected. Mortgage brokers use formulas of debt-to-income to determine the amount of money someone can borrow. The less debt you have (car note, student loans, credit card balances, etc.) the more you can borrow. It is important to do your own homework too in order to make sure that borrowing this pre-approved amount does not stretch your budget too thin when you finally move. There are a few things you should do to figure how much you are willing to spend on a house.


First, take a look at what you are spending now. How much is your rent? Does that include any utilities? A mortgage payment most likely won't include utilities, but it will include things like a homeowners' association payment.


Second, review your budget to understand if you can spend more than what you are already spending on rent or your current mortgage payment. How much more or less should you spend to reach your financial goals? Keep in mind the current housing markets in your local area. Everyone wants to spend as little as possible, but each area has a minimum amount required in order to live in a clean and safe environment. This will be different for each area and your local real estate agent can help you identify the amount in your area.


Third, when you start shopping stay true to the budget you set. Don't even tempt yourself with houses that would require a monthly payment more than you set as your max budget.


Fourth, be willing to walk away. Yes, the dream of homeownership is a popular one. One that many people aspire to achieve. But it shouldn't put a financial strain on your family. Instead find a cheap place to rent for another year. Spend that year working extra jobs to build a bigger down payment. This will help to lower the monthly payment of whichever home you purchase, or allow you to purchase a more expensive home. During this year you can also work with a good mortgage broker that can help you increase your credit score and possibly get a better interest rate, which will also reduce your monthly payment or increase the amount you can spend on a home.


If you want to buy a home, we are here to help you navigate this process. Just send us a text in the yellow box on the right.


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Peter & Traci Prantner
Realtors® | Remodeling | Handyman

Married Serving Florida

Heritage Real Estate Agency & Renovida

1112 New York Ave

Saint Cloud, FL 34769

Peter Cell Phone: (703) 628-5537

Traci Cell Phone: (321) 247-0856

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© 2019 by Peter & Traci Prantner, Married Serving Florida.

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