How Much Can You Afford to Pay for Your New Home?

If you are preparing to purchase a new house, one of the most critical things for you to consider is just how much home you can afford.

Prudent would-be homebuyers can reduce their stress by paying careful attention to the amount of money they can put down to purchase their dwelling, according to a recent post to the LearnVest website.

Just because your bank has given you the approval to buy a multi-million dollar home, for example, it might not make budgetary sense for you to spend that much at this point in your career.

A good rule of thumb is that your mortgage payment shouldn’t be more than 28 percent of the amount of money you earn every month, according to LearnVest. For example, a couple earning $100,000 per year will want to consider houses costing no more than $250,000.

Keep in mind that you will want to maintain some rainy day funds so that you can make payments for six months if your income changes for the worse.

Cary Amo is a real estate professional with more than 20 years of experience in Contra Costa County. For more information on budgeting for your home purchase or to get details on current market trends in the greater Lafayette, California area, please feel free to contact Cary Amo today.

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