If you’re like most Americans, you’ve been thinking about buying a home for quite some time. Many people dream about buying their first home long before they have the means to do so. You may have even picked out the curtains already. But one of the first steps toward making your dream home a reality, is determining how much home you can afford. Failing to do so, can land you in a situation that quickly sours your dream by creating unsustainable monthly payments that turn your dream into a financial nightmare.
Fortunately, figuring out that mystical number doesn’t have to be rocket science. Use our top tips to help you buy a home that is a dream for you and your budget.
1. Calculate the Price You Can Afford Based on Your Income
This step provides that most critical insight into the amount of money you have to spend each month based on your income. The goal is for you to not only have enough money to make your monthly mortgage payments, but also to pay your bills each month and have money to enjoy greater quality of life. Even your dream home can feel like a prison if you don’t have money left over to enjoy the things that make life fun.
You don’t have to be a math whiz to use our loan calculator for a good idea of how much your monthly payments will be for a specific mortgage amount. While our calculator doesn’t include everything that may be wrapped into your loan payment, such as mortgage insurance premiums, home insurance, property tax, etc.; it can give you a big picture idea of how the monthly payments will affect your month-to-month income and about lifestyle changes you may need to make.
Here’s the information you’ll need to make our loan calculator work for you:
- Total price of the home
- Down payment
- Interest payment
- Amortization period (length of the loan)
- Payment period (monthly)
This information can help you determine a price point for your dream home you can comfortably repay.
2. Maximize Your Down Payment
Most loan programs require home buyers to offer a minimum down payment amount. The good news for you is that by saving up to make a larger down payment, you can often afford a little more house. Sometimes, it allows you to afford a lot more house. Large down payments along with healthy credit scores can help you obtain lower interest rates that allow your house buying money to stretch even further. Plus, the less money you need to finance, the less you’ll ultimately pay for the privilege of owning your home!
3. Know Your Mortgage Options
Home buyers come from all walks of life. As a result, you may have different needs from your home loans. We are proud to offer a wide range of home loan products to meet a variety of needs. These are some of the options we make available to our community of home buyers:
- Construction Loans
- FHA Loans
- USDA Loans
- Conventional Fixed Loans
More importantly, we understand that you are unique individuals with unique borrowing needs. We work with you to identify the mortgage loans that will best meet your needs. It’s part of the unmatched service we offer you.
Are you looking for a home loan service that has your best interests in mind? One that offers the best advice for you, regardless of your budget? Call or stop by Mid America Mortgage today to begin your journey to home ownership.
