WHAT CAN YOU AFFORD ?
Realistically assessing your finances will streamline the home finding process .
Step 1 : Monthly Income Wages , salaries , business income after expenses Interest , dividends or rental income Other income ( alimony , child support , pensions or Social Security Total Monthly Income ( Step 1 )
Step 2 : Monthly Non-Housing Expenses Food / clothing Medical ( include insurance premiums and prescriptions ) Life insurance Childcare Automobile expenses ( loans , insurance , maintenance ) Education / student loans Travel / recreation Monthly credit card payments Monthly bank loan payments ( other than a mortgage ) Alimony or child support you owe Savings and investments Income taxes Total Monthly Non-Housing Expenses ( Step 2 )
Step 3 : Amount Available for Monthly Housing Expenses Equal to Step 1 minus Step 2
Step 4 : Monthly Estimated Housing Expense Mortgage loan payment ( principal and interest – see chart ) Property taxes Mortgage insurance Homeowner ’ s insurance ( liability , flood , fire ) Utilities ( heat , water , electricity , gas , trash removal ) Maintenance and repairs Other ( assessments , homeowner ’ s association dues ) Total Monthly Estimated Housing Expenses ( Step 4 )
Step 5 : Compare Step 3 & Step 4
The amount available for Monthly Estimated Housing Expenses ( step 3 ) should not exceed the Total Monthly Estimated Housing Expenses ( step 4 ).