How Much House Can I Afford To Buy?
One of the first questions I get the first time I talk to a potential buyer: How much house can I Buy? what this means is:
What I can qualify for based on my income, assets and credit.
The better question is What is a COMFORTABLE monthly mortgage payment? There can be a big difference between the amount a lender will allow you to spend each month on your housing and your comfort zone.
Lenders use your GROSS monthly income, not your take home pay, to determine your total allowable debt under their program guidelines.
Here are some things to consider when determining your COMFORTABLE payment.
- Are you currently paying rent or a mortgage now, is that comfortable or are you struggling?
- What is your lifestyle? Are you a homebody? Do you have expensive hobbies?
- Do you like eating out? Going to the movies or other entertainment?
- Have you budgeted for utilities, food, association dues, maintenance?
- Do you already have furniture, tv's, curtains, accessories, etc. to make the house a home?
- Do you have any expenses coming up like school or a new car?
- The student loans that are not in deferrment will eventually need to be paid, how will that affect your expenses?
- Do you have an emergency fund? What if something in the house breaks down or needs repairs?
- Is this your first home or your last?
Many clients tell me that they used an online calculator like the one below to determine their payment. These calculators help you to understand only the PRINCIPAL and INTEREST payment for different mortgage amounts, terms and interest rates. You are not getting a complete picture of your total monthly payment.
Most of the online calculators like this one do not include an estimate (or a disclaimer!) for:
- Homeowner's Insurance
- Mortgage Insurance
or extras such as:
- Flood Insurance (if required)
- Homeowner's Association Dues
- Special Assesments
- Ground Rent
If you want a true picture of your monthly housing payment, talk to a lending professional. They should have a calculator that they can send you that will take many of these items into account. Most online calculators are good for estimating purposes, but it takes a lending professional to ensure that you are getting the whole picture!
Bridget McGee Maryland Mortgage Mama NMLS# 196068 SWBC Mortgage. 410-960-2061 EHO firstname.lastname@example.org or www.marylandmortgagemama.com
If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure!
If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest. Please contact me at 410-960-2061.