If you are just beginning to look into purchasing a home, you may be wondering what price range is affordable for you. But the mortgage payment is not the only new expense you must consider.
Lenders are careful, but they make qualification decisions based on averages and formulas. They won’t understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected – for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.
Income, debts and down payment are big factors when it comes to calculating your affordability. But there are other factors to be aware of, too. Believe it or not, the interest rate you get could make a big difference in how much home you can afford because a lower interest rate could significantly lower your monthly mortgage payment. Your personal savings goals or spending habits can also make a big impact on your affordability, so remember to consider these when setting your home shopping budget.
Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.
If you want to get started and get a better picture of what you can afford it’s a good idea to find a reputable mortgage lender. The online affordability calculators are not always reliable and can be a waste of you time and emotions.