The Home You Can Afford
If you’re in the market for a home, you probably have a dream home in mind. For most people, that dream home remains a dream, because the location, style, square footage, and amenities they’d love to have are beyond their budget.
Still, it’s tempting to buy the most expensive home that your budget will allow, but most people are better off choosing a more affordable home. While it may not be quite as dreamy, the monthly mortgage payments will probably be a lot less, and you’ll be able to build up equity (ownership) a lot faster. You’ll also have more money on hand for improvements or those unexpected costs (such as broken water heaters) that can drain bank accounts.
A good strategy is to sit down with a loan officer before you start looking at homes. The loan office will examine your income and other debts, give you some idea of how large a monthly payment you’ll qualify for, and then show you what that means in terms of a home. Don’t assume that you need to spend the full amount for which you qualify.
For example, if the loan officer tells you that you’d be likely to qualify for a home costing as much as $90,000, consider setting your sights lower – such as the $75,000 to $80,000 range. That way, you should be able to make a larger down payment and have smaller mortgage payments. You’ll own your house – instead of your house owning you!
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