Determining How Much House You Need Before Buying in Lexington KY

Buying a home is a monumental moment in a person’s life. However, it is crucial to recognize your financial limits and purchase a house that you can comfortably afford. A mortgage does not have to empty your bank account; you can find a property that is within your means with the right lender and realtor.

Several factors contribute to how much you can afford when buying a home (income, current debt in relation to income, credit score, reserves, etc.). These all determine a baseline for what is justifiable for you to pay each month. Household income, such as salary or income stemming from investments, determines a baseline for what is feasible to pay each month. This is known as gross monthly income, which also contains tips, pensions, and alimony. Available savings can be used to cover the down payment or closing costs. Monthly expenses are used in calculation as well. Debts from student loans, car payments, credit cards, utilities, and other necessary bills are included in this portion. Your credit score will also be reviewed by the lender. Based on your credit profile, they will decide if you are accountable as a borrower. Lenders also look at the ratio of total debt-to-income. All of these figures are essential to establish an accurate assessment of how much money can be put towards purchasing a house and how much you can afford each month as a mortgage payment with your current financial situation. At home, you can even calculate how much house you can pay for by using an online calculator.

A new house has additional expenses beyond the list price. There are multiple costs that you should be prepared for during the buying process. Fees for appraisal, underwriting, credit report, mortgage application, and recording, all must be paid but are not incorporated in the purchase price. It is smart to spend less than you can afford to ensure that in the event of unexpected expenses, you have enough money to spare after mortgage payments. Just because you have money to spend, does not mean you should spend as much of it as possible. For peace of mind, you should give yourself some financial breathing room.

At Hometown Lenders, we aim to make the home buying process a pleasant experience for all of our clients. We are dedicated to customer service and keeping both clients and their real estate partners informed throughout the entire process. We aim to simplify the procedure and eliminate any stress associated with the home buying process. We have branches in multiples cities across Kentucky and Tennessee. Contact us today at 859-475-1323 to schedule an appointment.