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A crucial step in finding the right home is to first determine how much you can afford on your future home. First let's calculate the monthly payment that is affordable. To calculate this value, we will use a housing-expense ratio of 33%. This means that 33% of your monthly income can be spent on mortgage payments, including property taxes and insurances. Take your gross (before taxes) income each year and divide by 12 to determine a monthly income. Multiply the monthly income by 33% (.33) to calculate an estimated monthly mortgage payment.
Example:
Bob makes $60,000 a year. Therefore his monthly income is about $5000. If he has a housing-expense ratio of 33%, his
monthly mortgage payment will be $1650 (5000 times 0.33).
Now to determine a price of a house you can afford, choose an interest rate usually between 7.500% to 10% and use this mortgage calculator.
After you have determined an affordable amount for your new home, it is important to contact real estate brokers in the area that you are planning to purchase a home. They can provide you with available houses in your price range and that suit your personal needs.
Onto the next step.
