Buying a home is a huge decision. Thinking about owning your own home is exciting and the thought of moving your family into their own space is probably enticing. However, you might not know if you can afford to buy a house at this point in time. Here are a few ways you can figure out if you are financially ready to buy a house.
One way to figure out if a house fits in your budget is to track your spending from a period of time. You can review your bank statements and keep track of your spending for a few months. Factor in recurring bills, loan payments and other expenses to get an idea of how much income you spend per month.
Then, you can figure out what percent of your monthly income you can dedicate to a mortgage payment.
The Federal Housing Administration has a formula you can use to determine how much of a mortgage you can afford. It recommends you spend only 31 percent of your income per month on a housing payment.
However, this number can increase if you do not have any debt.
Do not forget about other bills you will have to pay that come with a house such as heating, water, electricity and other home maintenance.
The next step in figuring out if you can afford a house is organizing your finances. This can include checking your credit score and getting a mortgage preapproval. You should also figure out how much of your savings you can use for a down payment.
The New York Times has a mortgage calculator you can use to figure out what your monthly payments would be based on the price of your ideal home, mortgage loan type and interest rate.
Owning your own home is a big step toward building your family and ensuring their future security, but you should make sure it is fiscally responsible for you to make this large of a purchase.