How Much Home Can You Afford to Buy?
How Much Home Can You Afford to Buy?A reader asks: “How much home can I afford to buy? I am tired of renting, and I want to buy a house. My bank says I qualify to buy a home for $300,000, but I am worried if something breaks, I won’t be able to afford to fix it, plus make my mortgage payment. How can I make sure I won’t get in over my head?”Answer: You appear to be an intelligent first-time home buyer — a buyer who thinks ahead — and that’s good. It’s smart to consider affordability before signing that purchase contract and plunging into debt. Lots of home buyers, especially those in California, over estimate how much home they can afford. For example, a $225,000 home in California might be a starter home, but it still costs a quarter of a million dollars! Debt Ratios First, look at your monthly gross income, before taxes and contributions. This is how much you make per month, not how much you take home. Wha
How Much Home Can You Afford to Buy?A reader asks: “How much home can I afford to buy? I am tired of renting, and I want to buy a house. My bank says I qualify to buy a home for $300,000, but I am worried if something breaks, I won’t be able to afford to fix it, plus make my mortgage payment. How can I make sure I won’t get in over my head?”Answer: You appear to be an intelligent first-time home buyer — a buyer who thinks ahead — and that’s good. It’s smart to consider affordability before signing that purchase contract and plunging into debt. Lots of home buyers, especially those in California, over estimate how much home they can afford. For example, a $250,000 home in California might be a starter home, but it still costs a quarter of a million dollars! Debt Ratios First, look at your monthly gross income, before taxes and contributions. This is how much you make per month, not how much you take home. Wha
