When buying a home for the first time, your first instinct might be to spend the maximum amount that you’ve been approved for. But before you do this, it’s critical to think about whether you can really afford the mortgage your lenders are offering you.
Don’t rely on a bank to tell you how much of your monthly income you can afford to spend on a house. It’s important to first crunch the numbers yourself to determine how much money it’s worth taking from a lender.
How do you determine how much mortgage you can afford?
It’s not just you. It can be tricky to figure out how much mortgage you can afford. Insurance rates, property taxes, and lending legalities all factor into how much you’d be able to afford per month.
It’s for this reason that you need to conduct thorough and careful research before signing anything a lender hands you. What’s more, you also need to calculate how much you can afford based on what you’re already paying.
Approximately 33% of the home-buying population in 2017 were millennials. If you’re a millennial, odds are you may have a good chunk of student loan debt. You’ll need to factor in your student loan payments alongside your mortgage payments and other finances before signing anything.
Calculating your monthly cost
You’ll need a mortgage calculator that’s able to include different costs into your potential mortgage payment to determine what your real monthly cost would be. These payments include homeowners insurance and property taxes.
To determine how much monthly income you’ll be able to spend on a mortgage payment, you’ll need to determine the cost of your insurance premium and property taxes.
Something else to remember is to use the 30% rule of thumb.
To determine how much you’d be able to spend on a mortgage, take your pre-tax monthly income and multiply it by 30. Divide that number by 100. The answer you get is how much you could comfortably spend on a mortgage every month.
Where can I find new home builders that offer in-house financing?
If you’re looking for new home builders that offer in-housing financing on new construction homes in Houston, Dallas, or Fort Worth, you’ve come to the right place.
Camden Homes can help you finance your mortgage while also giving you the opportunity to buy a home that’s newly constructed. To learn more about our model homes and in-house financing, contact Camden Homes today.