How do you know what price range to look at?

My DH and I are looking to buy and have NO idea how much we can afford, what price range to look at.

How do you know?

Re: How do you know what price range to look at?

There are a lot of payment calculators on the web. They say 33% of your income should go toward your mortgage, of course you can pay whatever percent you want, that's just the standard figure that I've seen. I would figure out what 33% is for you, have the amt you have for a downpayment ready and use a calculator (any mls site usually has these) to figure the total cost of a house back from those numbers.

Re: How do you know what price range to look at?

I would def. suggest meeting with a mortgage broker. They will be able to tell you how much you can afford, what price range you should consider, and how much your monthly payments will be (and also a estimate of what closing costs are)

Re: How do you know what price range to look at?

if you are seriously looking, I would get pre approved first by a lender.

or use the calculators on bankrate.com

Re: How do you know what price range to look at?

Thanks for your help.
We were casually looking but now we're seeing houses that we like, are looking at a huge price variance and I didn't know where to start.

Re: How do you know what price range to look at?

It really helps to meet with someone. When DH and I first started looking we were looking at houses that were about 50K less than the one we ended up buying. We didn't realize how much we could afford (and we only afford this on 1 salary)

Re: How do you know what price range to look at?

Message edited 7/10/2006 10:41:49 AM.

Re: How do you know what price range to look at?

Re: How do you know what price range to look at?

Many places use the 28/36 formula ( I believe it's 36). Your mortgage should be no more than 28% of your gross income, and all your bills combined (taxes, insurance, electric, gas, water, etc) should be no more than 36% of your gross income. This is supposed to give you a comfortable payment.

I prefer to look at my take home pay instead. You can figure out your other bills and see what's left. All the realty website have calculators to show you what you can afford depending upon taxes, down payment and rates.

Re: How do you know what price range to look at?

Definately speak with a mortgage broker before you start looking. They will be able to tell you exactly what you an afford. I can recommend a great guy. FM me!

Re: How do you know what price range to look at?

we based our purchase with how much we would be comfortable paying every month, anfd what we had saved.

Re: How do you know what price range to look at?

I would look at what you pay in rent and then add in taxes, insurance, gas, electric, water, home repair, cable, internet, phone, cell.

Depending upon the size of your home it can vary but I will give you rough estimates of our monthly payments to help you.

monthly
Taxes: 300
Insurance: 45
Gas: 127
Electric: 45
Water: 20
Cable/Internet/Cell: 200
Home Repair: that can vary a lot.
We don't live on LI so our taxes and insurance are prob a lot lower than what you would pay for a comperable home on LI. For LI I would tripple our taxes and quadruple our insurance.

I did not include any consumer debt like cars, credit cards, student loans, etc. Nor did I include savings like 401k, ira, emergency fund, 529, etc. You could also have daycare, etc.

Lenders like to tell you that you can afford a lot more than you comfortable could. My DH and I looked at homes at least 50,000 less than the maximum they said we could afford.