How Much House Can You Afford?

Posted by Rebecca Prince on March 23, 2017

Couple In Kitchen

You’ve made an important decision – it’s time to buy your first home! So, how are you feeling? A little excited, a little nervous?

It’s ok!  Buying a home is likely one of the largest purchases you will make.  It’s a huge investment in your future, and it’s totally normal to feel a few jitters. 

Fortunately, you don’t have to go through the process alone!  Let’s talk about your first step, figuring out just now much home you can afford.

Take Inventory of your Current Expenses

As you embark on your home buying home journey, not all answers to your questions are going to be black and white.  Ultimately, you’re the only person who can decide how much you are comfortable paying for your mortgage each month.

When you start crunching the numbers, be sure to review all your current expenses like:

  • Transportation
  • Insurance
  • Groceries
  • Utilities
  • Unpaid debt
  • Mobile phone service
  • Medical expenses
  • Entertainment
  • And more!

Build A Budget

Now that you’re aware of how much you typically spend, it’s time to establish your home buying budget.  Owning a home comes with some additional costs you might not be aware of, and it’s important not to overextend yourself.  Here are some things to consider in addition to your mortgage payment:

  • Home maintenance
  • Taxes
  • Association fees (if they apply)
  • Emergency fund for repairs
  • Windstorm, flood, and other required insurance

Review Your Financial Report Card

Thought grading ended after graduation?  Your credit score is like your financial report card as an adult!  Lenders will use it to determine the interest rate and amount of your loan – or if you qualify for a loan at all.  Be sure to check your credit report carefully and call the creditor or credit bureau if there any errors.

And, if your credit score is not quite as high as you hoped, give one of our Lending Experts a shout.  They’ll help you develop a plan to get on the right track.

Get Pre-Qualified Before You Shop

Budget – check.  Credit score – check.  House hunt?  There’s just one more thing you need before you get started – your pre-qualification letter (PQL)!  Getting a PQL lets your know your approved price range, so you can shop with confidence.  After all, you don’t want to get emotionally attached to a home you can’t even afford.

During the pre-qualification process, financial institutions will pull your credit and ask you a few questions about your income, financial assets, and any debt you may carry.

Get pre-qualified now.

How DuGood Can Help

Buying a home can be an overwhelming process, especially if it’s your first time.  We want you to FEEL GOOD about the journey!  If you’re ready to get pre-qualified, you can you can apply online now or set up an appointment with one of our Lending Experts.

Not ready to load up the moving boxes just yet?  We totally understand!  Our FREE Home Buying Guide is super helpful and will walk you through the mortgage process step by step, so you get a clearer picture of what to expect.

Download the Guide.

Topics: Home