Figuring Out What You Can Afford
Buying a home is a huge investment,
and the decisions you make now could haunt you
for a long time, 30 years to be exact. Before you
enter into any mortgage agreement, you should know
what type of home you can afford and be familiar with
loan terms and how they affect the repayment of the loan.
At the very least, you should have a good idea of what kind
of payment you can realistically afford each month. Be sure
to calculate insurance and land taxes into the payment as well.
A great tool
A mortgage calculator is a great tool that you can use to see
how much you can realistically afford. Before you start punching
numbers into a calculator, however, you need to have a budget.
To create a realistic budget, keep a notebook with you and jot down
everything that you spend. Include bills, restaurant tabs, transportation
expenses, entertainment, etc. Track everything for an entire month.
This will give you a realistic budget. You may be wondering why you
can’t simply write down your bills and formulate a budget that way.
You can, but you will probably leave out daily expenses that will affect
your ability to make your mortgage payment.
A great tool
A mortgage calculator is a great tool that you can use to see
how much you can realistically afford. Before you start punching
numbers into a calculator, however, you need to have a budget.
To create a realistic budget, keep a notebook with you and jot down
everything that you spend. Include bills, restaurant tabs, transportation
expenses, entertainment, etc. Track everything for an entire month.
This will give you a realistic budget. You may be wondering why you
can’t simply write down your bills and formulate a budget that way.
You can, but you will probably leave out daily expenses that will affect
your ability to make your mortgage payment.
Remember: be sure to allow for expenses that will be tacked to your mortgagepayment. Your payment could end up being hundreds of dollars more
than what you figured with the calculator after you add on land
taxes and insurance payments.
After you formulate a budget, use a mortgage calculator to see what you
can afford. If you think you can afford a $700 monthly payment, enter this
amount into the payment field of the calculator and it will then automatically
fill in the other fields so that you can see how much you can borrow.
You should always use a mortgage calculator when shopping for a home. It can
help you compare the cost of buying different homes which will help you
immensely during the selection process. A calculator can also give you all
of the information that you need regarding a loan and may prompt you to seek more favorable terms.
Whenever you shop for a new home, you should shop for a new home loan as well.
Gather as many loan offers as you can and compare each using a loan calculator.
Doing your homework can save you a lot of money and heartache in the long run.
Think about this: a difference of only 1.5% interest on a 30 year, $100,000 will
cost you $39,980 in interest over the course of the loan. It’s your money. Use a
mortgage calculator to learn how you can hold onto more of it.