When you're ready to buy a house, it's easy to be swept up in the excitement. However, before you browse local listings or determine a neighborhood of choice, it's essential to first make sure your finances are in order. Most homebuyers require a mortgage to make their purchase, and there are a number of financial factors to consider before applying and when determining how much to spend. Not sure what you can afford? Try ASI Federal Credit Union's mortgage calculator to crunch the numbers and set your budget.
Calculating How Much You Can Afford
Start by taking a complete inventory of your current finances. Add up how much money your household brings home each month. Then, subtract all of your monthly expenses from that amount. Donít forget to factor in the following:
- Bills (utilities, insurance, debt payments)
- Emergency fund
- Child-related expenses
- Pet-related expenses
- And moreÖ
After subtracting your expenses from your income, youíll be able to see how much money remains. Thatís how much you can spend on a mortgage payment. Keep in mind that, generally, a mortgage payment should be about 25% of your total take-home income each month. If itís more, you may need to adjust your budget.
Calculating Your Mortgage Payment
Your monthly mortgage payment will be determined by a few different factors: the cost of the house, the insurance, the HOA fees, the interest rate and your mortgage loan. If you have a good credit score, youíll be more likely to get approved with favorable terms.
In addition, be sure to factor in anything else that might change. When you move into a new house, will your utilities increase? Will your commute be longer and cause more wear on a vehicle? Also, if youíre planning to have children in the future, think about how that will affect your mortgage budgeting. On average, a child can cost an extra $500 to $1,000 a month, so it's a good idea to include that amount in your expenses when making calculations.
ASI Can Help with Mortgage BudgetingPurchasing a new house can be confusing, but the lending experts at ASI can help you make these important decisions with confidence.Callor visit your nearest branch for personal customer service and expert support from a team of mortgage professionals dedicated to your financial wellness