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Review Your Budget Before Purchasing a Home

While home builders may claim to offer inexpensive housing, the affordability of a home is really up to you. What does your credit score look like? How much money do you have put aside for a down payment? Will you be able to qualify for a suitable home loan, and if so, what type of interest rate can you expect? No matter how low a seller's asking price, whether or not the home is really inexpensive depends on the answers to these queries. After all, what's inexpensive for the Trumps may not be inexpensive for you.

Of course, you may have secured approval for a home loan with outstanding interest rates and you may be able to handle a significant down payment, but there are other things to contemplate. Are you already inundated by other bills? Do you have a son or daughter soon to start college? What about health insurance? Do you have enough to cover sudden emergencies? All of these factors could take otherwise affordable loan payments and make them sky high. It's wise to make sure you're prepared for these costs also, before deciding on how much you can afford to pay when you're purchasing a home.
 
A chief factor in whether or not you can qualify for a home loan is your credit score. That score also impacts the interest rate you will be charged. If your credit score is outstanding, lenders will fight for the chance to provide you with a low-interest loan. However, if your credit score is meager, you may find it impossible to acquire a loan.
 
If you've been encouraged to fill out a loan application by your bank representative, he or she may be ready to give you an estimate of the size of loan you can expect. With that insight you can estimate your monthly mortgage payments and ascertain the home price range you can contemplate, as well as how sizable your down payment needs to be.
 
Contemplate utilizing a mortgage calculator
 
A number of companies provide free mortgage payment calculators online for you to use. To put it simply, a mortgage calculator takes the mortgage amount, the number of years in the term, and the interest rate of the loan and determines your monthly mortgage payments. Mortgage calculators are outstanding tools when you're striving to determine how a new home will factor into your budget. Of course, mortgage calculators simply provide estimates of your monthly payments, and should be utilized only to give you an estimate of the payments you face. For a more individualized result, speak with your bank representative. You'll need to provide the valid cost of the home in addition to the size of the loan for which you've secured approval.

By:Lee Bell

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