Are you shopping around for a house, but aren’t sure how much you should be spending?
The average price of a house in the United States is $226,800. However, depending on how many rooms you’re looking to have in your home, or how much property you want, this price can significantly fluctuate. That’s why today, we’ve created this quick guide to help you get a better understanding of housing prices.
Keep reading to learn more!
Figure Out the Housing Prices You Can Afford
The first step that you need to take in figuring out how much you should be spending on a home is determining what your monthly income is. After learning how much you’re bringing in a month, you’ll need to divide this income up. Figure out how much you can afford to spend on a mortgage a month, while also paying towards your other bills.
To make this even less challenging, you should take a look at your debt-to-income ratio. This ratio will give you a better understanding of how much money you spend on recurring debts that you have, every single month.
When applying for a mortgage loan, banks and lenders will take a close look at your debt-to-income ratio. This ratio will be what plays a significant role in how much banks are going to lend you for your mortgage loan.
To learn about applying for a loan, click here to find out more.
Think About Total Cost of Homeownership
One of the most common mistakes that first-time homebuyers make is not factoring in the total cost of homeownership into their budget. You won’t only have to worry about paying towards the interest and the principal of your loan when you’re paying your mortgage.
There are several other bills that you’ll have to factor in when deciding if you can afford the cost of a home.
Homeowners insurance protects you as a homeowner against hazards that you face. Things such as damage from lightning, fires, flooding, and even break-ins are covered under homeowners insurance.
While how much you’re paying towards homeowners insurance will vary, most mortgage lenders will require you to have homeowners insurance.
Another thing that you’ll be paying towards is property taxes. You’ll have to pay property taxes no matter what size home you live in or what state you decide to move to. The property taxes you’re paying go towards libraries, emergency services, and schools.
How much you’re paying for property tax will vary. This is dependent upon where you live. Before you decide to purchase a home, make sure that you can afford the property tax in the county that you’re shopping around in.
Learning if You Can Afford a Home
Understanding housing prices isn’t as simple as looking to see how much a home is worth. There are several other bills that go into the cost of a home, so make sure that you do plenty of research to ensure you can afford the entire cost of a new home.
Are you interested in learning more about how to save money to afford a new home? We’re here to help you with your buying journey. Check out our blog to learn more today!