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How Much Can You Afford?


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Blog by Bettina Reid | January 18th, 2013


Can you afford it

How Much Can You Afford?
Why is it so important to know how much you can afford to spend on a 
home? 
Two reasons. 
First, you don't want to buy a property and then find out, only after you’ve 
moved in, that you can't financially maintain it. That would mean having to 
resell it under stressful conditions. 
Second, you don't want to settle for a property that's less than ideal, when 
you really could have afforded the "dream home" you've always wanted.
So how do you figure out how much you can afford to pay for your next 
home?
The first step is to talk to a good REALTOR®. He or she will help you gain a 
clearer understanding of how much your current home will likely sell for in
today's market. That amount, together with other financial resources you 
might have (such as savings), will determine your down payment.
The next thing you’ll need to figure out is your mortgage. Your REALTOR® 
can help you find a lender who will take a variety of factors into account –
income, credit rating, debts, expected down payment, etc. – to calculate the 
maximum amount of mortgage for which you qualify. 
Say, through the proceeds of the sale of your home combined with your 
savings, your expected down payment is $90,000. If the lender authorizes a 
mortgage of $270,000, then you can afford a $360,000 home.
Of course, that doesn't mean you'll need to spend that much. In fact, a 
home that meets your needs in terms of property type, features, and 
neighbourhood, may in fact cost you less.
One thing is for sure. A good REALTOR® can work with whatever amount 
you can afford and show you homes on the market that most closely meet 
your needs.
Looking for a good REALTOR®? Call today
Why is it so important to know how much you can afford to spend on a home? 

Two reasons... 

First, you don't want to buy a property and then find out, only after you’ve moved in, that you can't financially maintain it. That would mean having to resell it under stressful conditions. 

Second, you don't want to settle for a property that's less than ideal, when you really could have afforded the "dream home" you've always wanted.

So how do you figure out how much you can afford to pay for your next home?

The first step is to talk to a good REALTOR®. He or she will help you gain a clearer understanding of how much your current home will likely sell for in today's market. That amount, together with other financial resources you might have (such as savings), will determine your down payment.

The next thing you’ll need to figure out is your mortgage. Your REALTOR® can help you find a lender who will take a variety of factors into account –income, credit rating, debts, expected down payment, etc. – to calculate the maximum amount of mortgage for which you qualify. 

Say, through the proceeds of the sale of your home combined with your savings, your expected down payment is $90,000. If the lender authorizes a mortgage of $470,000, then you can afford a $560,000 home. Of course, that doesn't mean you'll need to spend that much.

In fact, a home that meets your needs in terms of property type, features, and neighbourhood, may in fact cost you less.

One thing is for sure. A good REALTOR® can work with whatever amount you can afford and show you homes on the market that most closely meet your needs.

Looking for a good REALTOR®? Give us a call today and The Bettina Reid Group would be happy to help you with your next move.