Determining your affordability is one of the most important steps of buying a home. Here's where the process starts.
Selling your Massachusetts home? Get a home value report
Buying a Massachusetts home? Click here for full MLS access
When you buy a house, how can you determine your household affordability budget?
First, take a look at your combined gross household income. Typically, that's you and your spouse, but your kids might be on the deed in some cases. About 33% of that gross income should be the maximum amount allocated toward your principal, interest, tax, insurance, and private mortgage insurance. If one-third of your monthly gross income exceeds your monthly payment, you're probably spending a little bit too much.
It can also be very helpful to talk to a bank or lender to consider your monthly debt like car payments and credit cards. Add them in on a monthly, prorated basis with your projected housing expenses; this monthly debt shouldn't exceed 42% of your gross monthly income.
An experienced agent can put you in touch with a great lender.
If your unique situation is too complicated to handle on your own, there are mortgage calculators online that can help you find a budget orientation. Speaking with an experienced and skilled real estate agent can also help get you the right professional resources to determine your affordability. They can also help you assess the pros, cons, tax benefits, and appreciation benefits that come with homeownership, among other things.
If you have any questions about home affordability or you're thinking of selling your house, give me a call or send me an email. I'd be glad to help!
If you have any questions about home affordability or you're thinking of selling your house, give me a call or send me an email. I'd be glad to help!
