Buying a New Home Guide: What Can I Afford?

When considering buying a home, the first step you must always take is to determine your price range. Determining your price range before you start looking at homes can save you a lot of time in researching your location and the amenities you wish to have in your home. If you are armed with your price range and a good idea of what your area offers for that price range, you can be assured that you get the best value possible out of your home.

Your price range is more or less what you can afford, and what you can afford is a combination of your income, your local cost of living, your credit rating, and any current bills you may have. There are calculators available online which will help you figure out a ballpark figure of what you can afford in a new home. There are also useful calculators which help you figure out whether it is worthwhile to buy a home, or if you can get along cheaper renting a place.

In order to buy a home, you also need to have money down for a down payment, and closing costs and other costs associated with buying a home. You also need to have a steady job that will help you pay for your new home, and you must be familiar with the risks and costs associated with home ownership. Owning a home is a lot different from renting an apartment; there is a lot more freedom, but there is a lot more responsibility. You, and your financial partner, are the sole persons responsible for maintaining your home's condition and that can get more expensive than you bargained for if you don't do the research.

You also need to gaze into the crystal ball of your financial future. Is your job steady? Is your family growing? Do you have any other upcoming costs that might make your new start difficult? Do you have financial help available from family members if you should run into a financial snag?

When figuring out what you can afford in a new home, you need to make sure you figure for additional costs, such as additional utilities you may not pay in your current rental situation. You will also encounter property taxes and maintenance costs that you would not have to deal with while living in an apartment situation. Check the resources and calculators listed at the bottom of this article for more detailed help in calculating your financial future.

Sources and Resources:

Rent vs. Buy Calculator
http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH

Is Homeownership Right for you?
http://www.freddiemac.com/corporate/buyown/english/preparing/right_for_you/