How Much House Can You Afford?
This is one of the most important questions to answer as a home buyer, and can also be one of the trickiest to figure out. A number of factors come into play when determining your bottom dollar:
- You And Your Spouses Salaries.
- Additional Sources Of Income.
- Savings Account Balances.
- Amount Of Down Payment.
- Student Loan Debt.
- Credit Card Debt.
- Car Loan Debt.
- Personal Loan Debt.
Unfortunately, even after a very critical self-analysis, sometimes what we think we can afford and what the bank says we can afford do not match up in our favor.
This is why one of the most important pieces of advice I have for home buyers is to get pre-approved for a loan with their local Quad City Area bank prior to beginning their home search. If you’re in need of a good lender, reach out to me here, and I will provide you a great recommendation!
This pre-approval process will:
- Provide a baseline of expectations to work from when searching for the perfect house.
- Allow you to set a target price.
- Provide a starting point to determine your estimated monthly mortgage payments.
Calculating Estimated Monthly Mortgage Payments
With hundreds of tools available to assist home buyers in figuring their mortgage payments, it can be overwhelming to choose the right one that will provide you the most accurate estimate.
After searching through a gamut of mortgage calculators, the one I’ve found to be the most accurate comes from U.S. Mortgage Calculator. After speaking to your realtor, bank, and insurance company for the applicable numbers, you can simply plug in:
- Estimated Purchase Price (Home Value)
- Down Payment
- Mortgage Interest Rate
- Annual Private Mortgage Insurance (PMI)
- Amoratization Period (Length of Mortgage)
- Property Taxes
- Annual Home Insurance
- Any Applcable Monthly Home Owner Association (HOA) Fees
This can all be input as either a percentage or dollar value, and will provide an estimated mortgage payment calculation within plus or minus approximately $50 of what a buyers actual payment should be providing the data input is correct.
To access the U.S. Mortgage Calculator click here.
Disclaimer: QC Real Estate Life, QCRealEstateLife.com, and Kayla Darland are not responsible for any calculated estimated monthly mortgage payments based on use of the U.S. Mortgage Calculator found at http://usmortgagecalculator.org. It is the user’s responsibility to verify any calculations are correct, and it is the user’s responsibility if they choose to use those calculations when determining affordability of a home purchase price and any resultant monthly mortgage payments.