Knowing how much you can afford to pay is a crucial step in your search. Nailing down your budget early will make the overall process more focused and less stressful.
Here’s a good way to figure out how much you can afford:
The 28/36 rule is an established benchmark used by many lenders to determine how much credit to offer you. Here's how it works:
Get preapproved for a mortgage. Your lender can approve you for a certain to loan amount prior to your home search. This gives you a solid number against which you can assess the affordability of the houses you visit.
The "28" refers to the notion that no more than 28 percent of your gross monthly household income should go toward housing costs, which include mortgage principal, interest, taxes and insurance.
To calculate, simply multiply your gross monthly income (amount before taxes) by .28. Use this amount as a guide for how much house you can afford.
Example: You earn an annual salary of $70,000. Divide 70,000 by 12, giving you a monthly gross income of $5,833. Multiply that by .28, and you'll find you should spend no more than $1,633 each month on total housing costs.
The "36" part of the 28/36 rule refers to your overall debt, which shouldn't exceed 36 percent of your income. This is important to consider because other high monthly debt loads – such as car and credit card payments – impact the amount you can afford to spend on housing.
For first-time home buyers, the tricky part is knowing how much to budget for taxes and insurance. Your agent can assist you with this.
2810 Aurora Ave
Spirit Lake, IA 51360
Keelson Harbour offers assisting living apartments. 42 one and two bedroom assisted living apartments. Also, Keelson Harbour offers memory care suites for those seniors diagnosed with Alzheimers.
New Testament Baptist Church
2105 Gary Ave
Spirit Lake, IA 51360
Sunday at 11 a.m and 6 p.m.
Wednesday at 7 p.m.
Katy Lynn Boutique is a fabulous women's clothing store offering a wide variety of clothing, shoes, jewelry and more. Excellent customer service with all hands-on-deck in helping you find that special outfit. You can also place clothing orders online. A fun clothing store that is sure to impress!