Finding out how much home you can afford is the first step to beginning the home buying process. It’s important to look at your income, and determine how much you will be able to pay a month; this is the key to setting a budget. But, it can be extremely easy to deviate from the budget and end up being “house poor.” You don’t want to spend 95% of your paycheck on your mortgage, then have nothing left for other essentials! Many Realtors I know will refuse to show people homes outside of their budget for that very reason. For tips on resisting the temptation of over spending, read this post by Kimberly Duncan at Veterans United:
-Get prequalified for a loan for an estimate, but be aware of your own situation. Just because you qualify for a $200,000 loan doesn’t mean you should buy a $200,000 house.
-Don’t get emotionally involved
-Don’t calculate it with minimum payments in mind- always leave allowance for emergencies and larger payments.