There are many theories as to how much a person should spend on a home. There is no key dollar amount that you can plug in. It will depend on your ability, income, location, and motivation. If you are paying cash for a home then consider the affordability of taxes and insurance. If you are going to borrow money then you need to be able to live within your means and comfort zone as well as lender guidelines.
A general guideline to home purchasing is about two times your annual income. So if you make $75,000 per year then you might focus your home search at or around $150,000.
Lenders will generally allow your mortgage payment to be about 26-28% of your gross monthly income. They will also factor your existing debt into the equation as well. They will not allow your total of all monthly debts to exceed 36-40% of your gross monthly income.
How do I determine my monthly expenses?
In addition to your mortgage payments you will also need pay insurance and taxes. These can be handled by the mortgage company and rolled into your monthly payment or you may pay these on your own. Your lender can give you a better idea of what to expect. You can also check out the appraisal district for your county for tax information on specific properties.
Once you have an idea of your mortgage/tax/insurance cost and can factor that in with the rest of your obligations you can get a feel for where you will be most comfortable. You want to enjoy your home so be sure that to stay within your means.
I am ready!
When you are ready to take the next step be sure that you enlist an excellent agent to help you every step of the way.
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