Archive for August, 2009:
Buying A House and Deciding What Mortgage you can Afford
With the housing market in the doldrums some families have found that its a great time to buy a house. The questions is How Much Can I borrow for a Mortgage? Well that really depends on what you make. There are different formulas that will give you different ideas on what you can afford. I own 4 houses and I can tell you only what I think and has worked for me and my family. Now many of you might not like what I have to say because you like the feeling of owning a new house, but at what costs. Society has taught us when we were very young that owning a house is the greatest investment and best purchase you can make in your life time. I believe that is a little overrated but I do believe it is a great achievement as long as you get something you can afford. The down side is many people purchase houses that are way above what they can afford and end up tying a noose around there financial futures. A house comes with many other expenditures like in some states property tax, Association fees, Insurance and raised utility bills. These are things that are normally not discussed when asking the how much can I borrow for a mortgage question. These factors are very important in your final decision and should be known before the home purchase is made.
My experience has shown me that you can afford 25% of your monthly income for a home. That number includes, the Mortgage, Property Taxes, and home owners insurance. The figures does no include fixing or any utilities. You should also have at least a 9-12 month security back up fund after the down payment on the house has been put down for ultimate security. if you stick to this formula you will guarantee a good and safe purchase for your family and financial future.