Whether you are a first-time homeowner or you’re looking to upgrade your current home, it is vitally important to make informed choices before committing to a purchase. If, for example, you buy a home that requires a mortgage payment that is more than you can reasonably and reliably afford, you may find yourself risking a foreclosure as soon as your finances take an unexpected hit.
By committing to a mortgage payment that is within a truly manageable range, you can set yourself up for a successful homeownership journey. You’ll also be in a better position to afford repairs, minor upgrades, furnishings and other necessities that help to make a house a home.
Calculating a reasonable mortgage payment range
It’s important to seek professional guidance when purchasing a home, given the stakes of the transaction itself. However, you can start doing some research on your own as you prepare yourself for this process. To start, you can utilize a reputable mortgage calculator to get a rough sense of how much “home” you can afford.
These calculators will typically ask you if you’d like to determine your mortgage range by how much you can afford to pay every month or how much income you make. Generally speaking, you’ll need to purchase a home that will require you to spend less than 28% of your gross monthly income, unless you’re able to put down a sizeable downpayment and you will have regular access to non-income-based liquid assets that you’ll be utilizing to pay down your mortgage.
Researching the affordability of a home purchase is often key to sustainable homeownership goals. Should you have questions as you’re estimating the value of your next purchase, don’t hesitate to ask for help.