Buying a home is a huge deal. It is a life altering decision given it will dictate who your neighbors are, where you live, the schools your children will attend, the commute time to work, food, hospitals, etc. On top of the fact that a home will be the sentimental center of your life, it is also a huge financial decision. Homes or real estate are pretty much one of the most expensive endeavors or consumer goods almost all Americans can possibly purchase in their lifetime. Because of the immensity of the cost, homes almost always require financing from a lending institution usually a bank. Because the bank will dictate how much the buyer may borrow, the financing also dictates the maximum amount a buyer is able to borrow and therefore how much house they can afford.

It is a tough thing for a buyer to not qualify for a home they really want and to realize they didn’t even try for a home they could have bought. Therefore, it is a great matter of wisdom for a buyer to understand exactly how much they can spend at the outset of the home buying journey. As a quick and effective reference point, a buyer who has enough saved up to be able and put twenty percent down as an up front payment and has little or no other debts, they can probably purchase a home up to four times their annual earnings. Of course there are several other options and a lot more specific ways to calculate the total amount of financing a consumer will receive, but as a basic reference point that is a great place to start. An example of this is lets say a man makes an annual amount of fifty thousand dollars. He has some student loans, credit card, and a car payment which accumulates to moderate debt. He probably should not look for a house that is four times his annual income but one that is three times his annual income. A home that is in the one hundred and fifty thousand dollar range will probably work out nicely.

Some incredible tips in being able to afford a larger home is to pay down as many debts as possible. Paying down debts improves ones credit by showing lenders that you are willing to take personal fiscal responsibility and that more monthly income can be diverted to paying the mortgage payment.

Saving up as much as possible to pay as a down payment is an even better piece of advice. An individual who has a substantial percentage of the home saved up shows that they are serious about staying in the home and are a much less risky borrower enabling the bank to confidently lend more money.

Home’s with an added on apartment or a duplex or studio apartment are incredible because they will boost the buyers income and allow the lender to lend more money taking into account that the buyer will have an increased amount of money to pay the mortgage with.

Author Bio: Juhlin Youlien writes about Paradise Valley AZ homes and Fountain Hills Real Estate and other real estate like Scottsdale AZ homes for sale and Queen Creek AZ homes for sale.

Category: Real Estate
Keywords: homes for sale, real estate, buying a home, selling a home, loan, mortgage, foreclosurehomes for sal