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How to Calculate the Price You Can Afford for a Home

Watch more How to Buy a Home videos: Subscribe to Howcast's YouTube Channel - Follow these tips and learn how to calculate the price you can afford for a home. Howcast uploads the highest quality how-to videos daily! Be sure to check out our playlists for guides that interest you: Subscribe to Howcast's other YouTube Channels: Howcast Health Channel - Howcast Video Games Channel - Howcast Tech Channel - Howcast Food Channel - Howcast Arts & Recreation Channel - Howcast Sports & Fitness Channel - Howcast Personal Care & Style Channel - Howcast empowers people with engaging, useful how-to information wherever, whenever they need to know how. Emphasizing high-quality instructional videos, Howcast brings you experts who provide accurate information in easy-to-follow tutorials on everything from makeup, hairstyling, nail art design, and soccer to parkour, skateboarding, dancing, kissing, and much, much more. Step 1: Determine your down payment amount Determine how much money you have available to put toward your down payment and closing costs. Include money from savings as well as any profit you would make selling your current home. Step 2: Make a list of all of your current debts Take stock of your finances by making a list of all of your current debts and their monthly payment amounts. List credit cards, auto loans, student loans, and any other outstanding debts. Total up the full amount you will need to have per month to pay these debts. Tip Avoid any major purchases on credit in the months leading up to your home purchase. Don't take on any new debt, or you risk damaging your credit score and affecting your ability to get a loan. Step 3: Find current mortgage interest rates Find current mortgage interest rates by talking to a mortgage lender or searching on the web. Step 4: Input information into an online home affordability calculator Input the information you have found into an online home affordability calculator to find the maximum amount that a lender is likely to give you toward a new home purchase. It will also provide information on the maximum monthly payment you can afford. Tip Be sure that the calculator includes property tax payment, insurance, and home owner's association fees, also known as PITI, in your monthly payment. Step 5: Decide whether that is a realistic total Decide whether you can really afford that total monthly payment. Remember that the calculator only takes into account your fixed debt, not expenses such as vacations or frequently dining out. Step 6: Set your price limit, and stand firm Set your personal price limit and, even if you are told that you qualify for more, stand firm. Don't stretch your finances and you will soon find the perfect house at the perfect price. Did You Know? A 2010 survey by showed that Texas was the state that saw the most growth in the first half of 2010, with 12 percent of all intrastate movers in the U heading to the Lone Star state.
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