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What you can
afford is different from what you can buy.
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If you can put up
a 10% down payment on that $100,000 house, a mortgage lender can usually be
found to give you a $90,000 loan to buy the house. |
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But unless you like living dangerously, the monthly cost of home
ownership had better fit comfortably within your monthly
income. |
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Monthly
cost of home-ownership:
A good number for deciding what you
can afford.
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Yes,
you saw a similar calculator on our Down Payment page
but this one includes maintenance and does after-tax as well as pre-tax payments |
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Note - Monthly
cost of home-ownership ignores non-house expenses:
- Food and Clothing
- Savings for
retirement
- Savings for vacations
and recreation
- Other financial goals,
such as starting a business
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Mortgage lenders are more than happy to tell you
how much you can borrow (our mortgage
size estimator might be quicker).
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 Danger: mortgage
lenders tell how much they will lend. They can't tell
you what you can afford because their calculation considers current
income and current debt and not much else.
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| Most of us need to
focus on mortgage amounts less than the maximum a
mortgage lender will lend. Unless confident that your
income will be increasing sharply, don't accept a mortgage more
than 80% of the maximum that mortgage lenders will
give.
If lenders are willing to loan $160,000, plan on a
$130,000 mortgage (about 80% of the $160,000) and a
house costing no more than $155,000.
| No, this
won't be your dream house. The dream house comes
later, ...after you have saved more cash and
built up your income. |
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Top
of page |
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Copyright January 1, 2003
Audrie.com Corporation
PO Box 870454
Stone Mtn, GA 30087
All rights reserved
Fax: 770-469-2180
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