How Much House Can I Afford?
As it turns out, many people have no real idea what they’re looking for when they decide it’s time to buy a house. They know nothing about square footage, land, mortgage payments, and sometimes things such as inspections. Here’s a brief guide in how you should shop for new houses or real estate.
The very first thing you need to do is determine how much house you can afford based on your current salary. You know how much you make going in, which is very important to keep in mind. Some real estate salespeople will put together figures and then tell you amounts that, realistically, you know are way out of your range, but you sometimes believe exactly what they say. The first time my wife and I looked at a house many years ago, our yearly total income was around $80,000, but the realtor told us we could afford a house as much as $250,000. Don’t be fooled by numbers like that.
The next thing is to determine what you want in a house, or in real estate, before you start to look at anything.
When it comes to real estate, you’ll want to know where the property is, how much it is in acreage, and how much its estimated value has either increased or decreased over the past 10 years. You might be thinking about buying property with an expectation of building a house there, or hoping that the land will become valuable because a buyer wants it as commercial property.
If you’re thinking about buying a house, you’ll want to know more than how many bedrooms and bathrooms. Things like how many garages, regular basement or finished basement, attic and separate laundry room might be something you want to consider. Do you want a two-story or a ranch, contemporary, or modern? How much space would you like between you and your neighbors? Which town will your house be in, since some cities are divided by townships in some states, as this will determine what your town taxes might be. Are there certain zoning laws in one town as opposed to another that determine the types of changes you want to make to your home? Is it a planned community or a different type of established community, or even a brand new housing development?
And, of course, after you’ve looked at anything, if you’re considering it, you’ll want someone to inspect the house, and it should be someone you hire rather than someone the realtor hires. Even if it’s regular property, you want an inspector to look at it all and give you a full report on what’s seen. You might be purchasing property that’s over a gas line, or, if you’re buying a house, the wiring might be problematic, or there might be signs of flooding that’s somehow been covered up. Not all states have truth of disclosure laws.
If you remember these few tips, your house shopping efforts will go smoother, and you’ll feel more comfortable throughout the process.
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Good advises, I also tell the client to think for the next 10 years, some more kids, if they going to open some sort of business from home and don’t buy anything to expensive because the interest is low today.
You’re tips are pretty good, and in an economical crisis any good advice is better than anything else, thansk for the great reading
One of the first conversations I have with first time buyers involves determining how much they want to pay a month – NOT what their lender has told them their limit is.
Another vital point in our neck of the woods is school districts. It is amazing the role this plays in home values between the two primary counties in our area.
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Obviously, what you can afford and what you can get are entirely different things, but this is an old standby for figuring out how much house to consider.
I'm glad you started with salary and budget considerations before pre-approval. Too many buyers rush into the process of getting pre-approved, without setting a budget for themselves first. Nice work! ~Brandon
house is probably the toughest problem to everyone of us. I just can not afford a house by my salary.
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I bought a small house by down payment. I got a lot of pressure. did I deserve it? I do not know. I get a little bit regreted.
I wanted to add something else. How about mortgage plans? A group of new home buyers are not aware of all the mortgage options available to them whether they are good or bad resulting in a bad decision that they will regret later. Is there a non for profit organization to assist new buyers in making the right choice?
I would always suggest clients restrict their borrowing to 50-30% of their monthly disposable income. Having said that different clients have different lifestyles. What may be affordable for one set of clients may not be so for another even though their income may be identical!
When searching for a new home, you should never get something out of your means as this will put you into financial trouble in the future. Do think about the future like if there is room to children if you want them but don’t go over the top and get too many features such as huge garden and and stories housing if it is out of your price range. Always get an independent surveyor as they are paid to be truthful and honest on the state of the house which is crucial as if there is a fault with the house such as eh room, as soon as the signature is signed and something was not checked then its your concern and not the previous tenant.