Lenders need limits. So do you. They just aren’t always the same. Lenders want to give you the most flexibility possible when shopping for a home. So a mortgage might be considered affordable if your monthly payment, plus payments on any other revolving debt such as auto loans, car insurance and credit cards, is 36% of your monthly gross income.
The monthly mortgage payment will include homeowners’ insurance and property taxes, so you should get an idea of what those figures are where you live. Coastal areas may require significantly higher insurance premiums and your property taxes can vary from one town to the next. A helpful lender (ahem, like Primary Residential) will ensure you have the right information or the right contacts to ask for the information you need. It’s easier to understand how much house you can afford, along with the associated price range you should be looking in, when you back these numbers out.
Don’t forget to budget for your down payment, home maintenance and an emergency fund. While these dreary considerations might mean you’re looking for a house with a smaller price tag, they will also help ensure that you can afford to pay your mortgage and live your life while you’re at it.
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