Buying a Home in the South Bay – determine how much you can afford

It’s important to set realistic expectations about how much you can afford at the early stages of buying a home. This will help you narrow down your choices and make the decision process less confusing and more productive. From a practical standpoint, determining your floor and ceiling price will also help you know where you stand when it comes to negotiations down the road. It’s important to set realistic expectations about how much you can afford at the early stages of buying a home. This will help you narrow down your choices and make the decision process less confusing and more productivee the one who would know best all the expenses you tend to have regularly; this will be more accurate than the projected expenses that a bank will take into account when they propose a mortgage plan for you.

Here are the variables that you should take into account to avoid purchasing a home that you can’t really afford (one of the most common financial mistakes made today).

Your Income

Determine your household’s monthly income after taxes as well as your expenses. This includes your monthly utilities (electricity, water, car/life insurance) and whatever debts you currently have (car, student loans, etc.). If you have a budget for items that are not necessarily essential, estimate how much you spend on these items (e.g., clothes, gadgets, take-out) to get a more accurate picture of how much of your income you can allot to paying for your home each month.

Think Ahead

It’s advisable to come up with a projection of your expenses once you purchase your new home. If you will be living in a single-family home in the suburbs, make sure to take into account the expenses that will come with the upkeep, property taxes or increased transportation costs once you move. Living in an apartment or condominium unit may also mean having to pay for monthly association dues for the maintenance of the building’s facilities as well security. Don’t overlook any of these factors as they will definitely affect your overall expenses.

Try Using Mortgage Calculators

Online mortgage calculators take into account interest rates that will greatly affect how much you pay each month. While interest rates are constantly changing, these calculators can help you get an idea of how much your monthly mortgage payments will look like at different interest rates so you can see how much the values change.