Keys and Golden Keyring with the Word Home over Black Wooden Table with Blur Effect. Toned Image..jpegWhether you're currently a renter or you'd like to upgrade to a home that's larger or in a new location, it's important to understand where your budget truly stands. To find out how much house you can afford there are a few things you should keep in mind and a few great tools that can be utilized. Let's walk through some suggestions this article.

Can You Afford Your Dream Home?

Income, Debt & Expenses

Your income, or the money in your household that is consistently coming in, is the foundation for what you can really afford to pay each month. Realtor.com suggests using the 28/36 rule to avoid getting overwhelmed by budgets and numbers. They say that,

"The “28" refers to your monthly housing payments—things such as mortgage, insurance, and taxes—which shouldn't be more than 28% of your gross monthly income (ideally it should be less)....The “36" refers to your debt-to-income ratio, which compares how much money you owe (to credit cards, colleges, car loans, and—hopefully soon—a home loan) to your income."

Think about your monthly expenses. Do you have student loans, car payments, credit card bills, tuition or daycare fees? Don't overwhelm yourself financially by choosing a home that will put you even further into debt or barely treading water based on your monthly income. It's always wise to spend less than you can afford on your home. Why? Because there are so many unforseen costs in being a home owner. You need to save room for any costly upgrades, renovations or repairs once you move in. You also want to save for general upkeep such as landscaping, utility bills and cleaning. 

Resources For Identifying How Much Home You Can Afford

There are many great resources available to help future home owners identify affordability. Here are just a few reliable sources to get started with:

Realtor.com Home Affordability Calculator

This calculator will help you determine what price range you can afford for your new home.

Click here to use this tool!

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Bankrate.com Mortgage Estimate Calculator

This tool will help you calculate the mortgage amount that best fits your budget. 

Click here to use this tool

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Zillow.com Debt to Income Calculator

Find out if you are eligible for mortgage by using this debt to income ratio calculator by the experts at Zillow.

Click here to use this tool

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Moneyunder30.com "How Much Home Can You Afford" article

A lot of great information in this article regarding home affordability including some basic rules of thumb on calculating mortgage payments and housing payments. They also have their own home affordability calculator, check it out here!

Click here to read the full article

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Khalil El-Ghoul

Discover our 2.25% Full Service Listings and Buyer Rebates. Khalil is dedicated to guiding home buyers and sellers with expert advice and objective information. For professional real estate assistance, text Khalil at 571-235-4821 or email khalil@glasshousere.com today.