Step 3: DETERMINING HOW MUCH HOME YOU CAN AFFORD | First Time Home Buyer's Guide
You determine your credit score and downpayment and closing cost, today we're going to be talking about step three - how much house you can actually afford. Now this one is a little more difficult because it really depends on each individual person's unique financial situation. But we're here to help guide you through the process and tailor a homebuying plan that makes sense for your budget!
Step number 3 is important because the lender will use this information to pre-qualify you for a loan and give you an idea of what interest rate you can expect. It's also a good idea to know your budget before beginning the home search process so that you don't get your heart set on a property that is out of your price range.
There are a few different ways to determine how much house you can afford and it really depends on what method works best for you. You can start by looking at your current financial situation - income, debts, and expenses - and using that information to calculate a monthly mortgage payment that is comfortable for you.
It is important to take this seriously because your mortgage payment will likely be your largest monthly expense and you don't want to end up house poor! There are a number of online calculators that can help you with this process or you can speak with a lender to get a more accurate estimate.
Once you figured out your monthly mortgage payment, you can start to look at properties in your price range. This is where working with a real estate agent can be really helpful because they can help you find homes that fit your budget and meet your needs.
Thank you so much for watching, we hope this video was helpful in beginning to understand the third step of the home buying process. Stay tuned for next week's video where we'll be discussing step four - Choosing A Lender!