When Brian and I first determined to buy a residence, again in 2006, we spent over a year buying earlier than we observed one we had been glad with. That's frequently because of the reality we simply refused to compromise on two topics: place and rate. We did no longer need to buy a residence in any respect if it wasn't in a walkable town, with a brief journey to artwork for Brian - which, spherical here, pretty a extraordinary deal narrowed it proper down to Highland Park or Metuchen. And we didn't need to buy one if it'd stretch us too an extended way financially, which pretty lots capped our rate range at $350,000 fashionable. And frankly, houses in Highland Park and Metuchen for a great deal much less than $350K were quite few and a long way among.
From time to time, human beings could attempt to steer us we must bear in mind looking out of doors our charge variety. Our real property agent, or even occasionally my mom, would possibly inspire us to
So how did we come up with this number in the first place? In a word, math. First, we determined how much of our monthly income was already spoken for, and how much wiggle room we wanted our budget to have. Based on that, we worked out what percentage of our income we could afford to put toward our housing payment and still feel comfortable. Working backward from that, we were able to figure out how big a mortgage we could manage. And finally, we figured out what we could afford for a down payment, and added that in to come up with the total price.
If that whole description was a little too fast for you, don't worry; my latest article for Money Crashers covers the whole process in much more detail. First, I go into some detail about the hazards of buying too much house - the problems that Brian and I were so eager to avoid when we bought this one. Then, I go through the whole process of finding the right price, including the factors that affect what you can afford (such as your down payment). And finally, I talk about what you can do if you find - as we did - that your target price is so low you can't find any houses in your area to fit it. (Ideas include saving up a bigger down payment, paying off outstanding debts, improving your credit, or looking for special programs to help low-income buyers.)
Get the skinny here:How Much House Can I Afford?
