Whether it’s your first home or your second, buying a home is an exciting adventure, and getting lost in the moment can be easy. But take a step back and ask yourself: How much house can I realistically afford?
Your gross income is the income you make each month before taxes, and other deductions are made. Gross income comes not only from your monthly paycheck but other sources of income like:
Income like Social Security benefits and the money you received from the sale of a home is excluded from your gross income.
When you purchase a house, you’re not only buying the home for how much you negotiate it for. You are also paying for the following:
Some of these factors, like closing costs and down payment, are paid at closing and contain other fees such as:
You can rest assured that most costs are all paid at once, and your lender will give you the estimate in advance.
There are three kinds of monthly expenses, all of which are important in determining how much house you can afford:
To calculate your monthly expenses, gather your monthly financial statements and create a list of what you’re paying—remember to include both bills and discretionary expenses. If you’re having trouble keeping track of your monthly expenses, a secure money manager can help.
Beginning the steps to purchasing a home? SmartMortgage.com by Guild Mortgage has experienced agents ready to help you begin your journey to homeownership. We will help you review your finances and consult with you about what to expect and how much you can reasonably afford.
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