Here's a question most people don't ask themselves: How much house can I afford? Instead, they ask a bank how much they can afford -- which is a very bad mistake. Fortunately for the person in this article, she asked MSNBC how much house she could afford. Their answer:
This question really has two very different answers: 1) how much will a lender give you? and, more importantly, 2) how much do you feel comfortable borrowing?
Especially for first-timers, you really need to start with question #2, and no one can answer it better than you can. If you’ve never made a budget, sit down and come up with one. How much cash do you think you can comfortably afford to devote each month to housing (mortgage) payments? Some people are willing to forego movies and dinner out, bring lunch to work every day and give up their car – anything to own a home. Some stretch too far and find themselves pouring all their income into the house, leaving themselves in permanent financial stress.
They also recommend checking out mortgage calculators on the web like ones found a Bankrate .
My two cents on this topic is that if you follow the right formula for buying a house you can be a wealthy homeowner with little stress on your finances. On the other hand, if you stretch too far, buying a house could be your financial downfall. Proceed with caution. And before you do, check out these posts from Free Money Finance: