Buying a home can be a wonderful choice if you’re ready. If you’re not ready, getting a mortgage and keeping your house can be a rough road. The tips below will help you determine how much mortgage you can afford.

1. What Is Your Income?

What’s you’re take-home income? This should be separate from side hustles. You need an honest assessment of how much money you have available to support your household each month so you can build a budget that works.

2. How Much Other Debt Are You Carrying?

High levels of debt can deeply cut into available dollars to pay your mortgage. If you are trying to get a loan for a house, make sure you also declare what you currently pay out for consumer debt, such as credit cards, vehicle loans, and student loans.

If your payments are too high to make it possible to get a mortgage right now, you can improve your chances by taking 12 to 18 months and paying down other debts before you re-apply for a mortgage.

3. What Do You Have In Savings?

If you’ve saved up for a down payment but need emergency savings, you may not be ready for a mortgage. Once you’re in the house, all repairs are your responsibility. If your water heater fails, you need to take care of it so you can enjoy a hot shower.

There are many theories on how much you should have in savings before you buy a home. Look at your current budget to see how much you’re paying for housing and what you’re putting into savings. It may be possible to quickly build up savings to cover an emergency in your new home. Do your best to have those dollars in place before you buy.

4. What’s Your Credit Score?

A low credit score can impact your ability to get a mortgage. If your score is low, talk to an investment professional about loan programs; you may be able to take some steps to raise your score before you fill out your mortgage paperwork.

5. What Skills Do You Have?

If you have some skills and buy a fixer-upper, you can save money on your home. However, if you’ve never used a drill or a saw, don’t buy a fixer-upper. Too many new homeowners get in over their heads and buy a home that needs a lot of work. Tools are expensive, and materials are getting more costly over time.

6. How Long Do You Plan to Live In the House?

If you’re planning to buy a big house for the family you hope to have, a 30-year mortgage may be a good idea if that’s what you need to make it fit your budget. It may make sense to keep renting if you will be in the region only for a short time.

In a tight housing market, getting the right house for the right price is key. Stay flexible, get pre-approved, and be ready to put in a bid quickly so you don’t miss out on a great deal.

Disclaimer: This content is for informational purposes only and is not intended as financial advice, nor does it replace professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.

Published by: Nelly Chavez