A home is likely the single largest purchase a person will ever make. The first thing buyers should consider is whether they can afford to buy a home and, if so, how much they can afford to spend.
Generally speaking, lenders suggest that the cost of mortgage payments, property taxes, heating and condo fees (if applicable), make up no more than 32% of a household's gross monthly income. Gross income is income before taxes. Overall debt load, including things like car payments, personal loans, credit card payments and other debts, is also a consideration. Lending institutions generally look at keeping total debt payments below 40% of a household's gross income.
While your mortgage payment is likely to be your highest single expense, home ownership comes with several other initial and ongoing costs, including home maintenance. It is important to think about all financing costs, closing costs, and ongoing costs that come with home ownership.
Most people will borrow money to purchase a home. Understanding the process for getting a mortgage and the costs involved is important for buyers.
The purchase price of the house is not the only cost involved in buying a home. Information about these other costs can help purchasers be prepared for the total cost of buying a home.
Even after the purchase is complete there are ongoing costs for owning a home that buyers should plan for.