How much can you afford?
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Wednesday, 29 January 2014
How Much Can You Afford?
Why is it so important to know how much you
can afford to spend on a home?
Two reasons.
First, you don't want to buy a property and
then find out, only after you’ve moved in, that you can't financially maintain
it. That would mean having to resell it under stressful conditions.
Second, you don't want to settle for a
property that's less than ideal, when you really could have afforded the
"dream home" you've always wanted.
So how do you figure out how much you can afford
to pay for your next home?
The first step is to talk to a good
REALTOR®. They will help you gain a clearer understanding of how much your
current home will likely sell for in today's market. That amount, together with
other financial resources you might have (such as savings), will determine your
down payment.
The next thing you’ll need to figure out is
your mortgage. Your REALTOR® can help you find a lender who will take a variety
of factors into account – income, credit rating, debts, expected down payment,
etc. – to calculate the maximum amount of mortgage for which you qualify.
Say, through the proceeds of the sale of
your home combined with your savings, your expected down payment is $90,000. If
the lender authorizes a mortgage of $270,000, then you can afford a $360,000
home.
Of course, that doesn't mean you'll need to
spend that much. In fact, a home that meets your needs in terms of property
type, features, and neighbourhood, may in fact cost you less.
One thing is for sure. A good REALTOR® can
work with whatever amount you can afford and show you homes on the market that
most closely meet your needs.
Looking for a good REALTOR®? Call today!
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