Things to Consider When Purchasing a Home
There are many issues to evaluate when considering a home purchase including what you can afford, what kind of loan best suits you, the property itself and once you find your dream house, how much you are willing to pay for it.
How Much Can You Afford?
Before starting your search for a home, you must decide how much you can afford. Generally speaking, it is recommended that the down payment be a minimum of 5-20% of the purchase price. In addition, there are two other standard thresholds to consider in terms of how much of your monthly income should be spent on housing.
• Your total housing costs (mortgage, interest, property taxes, insurance) should not exceed 28% of your income.
• The combination of your housing costs and all other monthly debt (car loans, student loans, etc.) should not exceed 36% of your income.