If you are in the market for buying a new home, there will likely be many things that you need to consider. While everyone may want to purchase a home at the top of their price range simply because it is better and larger, this is not always advised. You should be able to buy a home that both you and your mortgage lender believe you can afford. You should be able to set a budget, afford all of your bills, and be able to enjoy your home. If you are not able to enjoy your home, there is no reason to buy it. Every homeowner should have the freedom to live their lives and not be tied down to a mortgage that they can barely afford. If you are looking to buy a new home, here are some ways to tell how much home you can really afford.
#1) Set Your Own Budget
No one knows your financial situation better than you and your partner. You both know how secure your jobs really are, the income you have coming in each month, the expenses you have each month, and how you want to live your lives. If you love to travel, you know that you want to have money in your budget for travel. Your mortgage lender may not take these types of things into consideration so it is important that you and your partner create your own budget.
You should sit down together to determine exactly how much you have coming in each month. You should also determine how much your bills cost, how much you want to save each month, and how much you want to have in an emergency fund. You should also determine how much you want to have saved to make small updates to your home. For example, if you are looking for barn doors for sale or other features, you may want to have more in your budget for these things that will help you enjoy your home more. Creating your own budget will help ensure that you are not under too much stress when purchasing a home.
#2) Talk to a Mortgage Lender
One of the biggest ways to really determine how much home you can afford is to talk with a mortgage lender. A mortgage lender works for a financial institution that will be lending you money to buy your home. They will have you complete a mortgage application, answer a variety of questions, and submit proof of income and bills. They will take the application process very seriously to ensure that all of your financial information is submitted to them. Since they are at risk if you do not pay your mortgage they will also look at your credit score and make a determination of how much they will lend you.
Just because your mortgage lender is willing to provide you with a large amount of money, it does not mean you should actually purchase a home for this amount. Oftentimes, mortgage lenders will approve people for more than they should. This can result in a family getting their house foreclosed on. Plans and jobs will always change so it is essential that you plan for the unexpected and talk to a mortgage lender about all of your options.
#3) Anticipate Problems
Another thing that you should always plan for when purchasing a home is to anticipate problems. A recent study found that fifty-five percent of homebuyers hit at least one problem after buying home. This is a common issue that many people encounter. Whether you have an appliance break, a water leak, or storm damage it is crucial that you have money in your budget to repair these issues. You should anticipate problems before they happen and have money in your savings account or emergency fund to cover the costs.
#4) Plan for Remodels
Another thing that you will want to plan for when buying a home to ensure that you can turn the home into your dream home is to plan for remodels. Every homebuyer will likely want to make a couple of updates to the home they buy. If you plan for remodels, you can ensure that you have enough money in your budget so that you do not need to stress out.