Tips for Calculating How Much House you Can Afford

The idea of buying a house can be daunting. It’s a large purchase that usually requires a loan for most people. So how do you know how much house you can really afford? There are so many factors to take into consideration, it can be difficult to settle on a price range that will be affordable and allow you to consider the type of luxury homes in Greensboro that you want. Try these tips for calculating how much house you can afford and still live the lifestyle you want.

Start with a Preapproval from a Reputable Lender

One of the major factors in how much house you can afford depends on how much your lender will approve you for. Before you start looking or ever make an offer on a home, your lender will preapprove you for a certain amount, which basically says they are willing to finance up to that amount but no more. Be careful though: this is not the amount you actually want to spend on a home. You actually want to shoot quite a bit lower than your preapproved amount. If you buy a home that is at the top of your price range, you won’t have much to spare each month after you make your house payment.

Analyze your Monthly Household Budget

Sit down and write out your complete budget. Start with your monthly income and subtract all of your bills (don’t forget gas, groceries, and spending money). Then see how much you have left to spend on housing. You’ll get a pretty good idea of what kind of house payment you can afford to pay on a monthly basis, which will help you further narrow down your price range.

Your Credit Score and Interest Rate Go Hand in Hand

The rate you get depends on the state you’re buying a home in and your credit score. Typical rates differ from state to state so you might find that your rate could be either higher or lower if you’re moving out of state. Your credit score also affects the rate you can expect to get. The better your credit score, the lower the interest rate you can qualify for.

Property Taxes and Escrow Should Factor In

Property tax can actual vary quite a bit from one city or county to the other. In many cases you’ll pay more in property taxes in the city, but you may find that county houses are priced higher so that it all balances out. You should budget for property taxes when deciding on your price range. Escrow allows you to work the property tax into your monthly payment so that you don’t end up owing a large sum of money each year all at once.

Find Luxury Homes in Greensboro that You Can Afford

Once you know your price range, Smith Marketing and Allen Tate Realtors® can help you find the home of your dreams that fits within your monthly budget. When you’re ready to start touring affordable luxury homes in Greensboro, call (336) 215-7880.