3) How Much Home Can I Afford?

Before you start looking at homes, it's a good idea to find a target price range that you can afford. A mortgage lender will want to make sure you can qualify for the down payment, plus a monthly mortgage payment made up of principal, interest, taxes and insurance (PITI).

Interest rates and your personal finances will influence the amount of house you can afford. For a quick estimate of a monthly mortgage payment for which you may qualify use the following worksheet. You can also find a mortgage calculator for any home posted on the Windermere Web site at www.windermere.com. But remember, it's always good to talk to a lender before you start shopping for a home. I can refer you to lenders suited to your specific financial needs.

Annual gross income (before taxes):		$
Divide by number of months		/ 12
Monthly gross income:		> = $
Many lenders will not allow you to spend more than 28% of your monthly income on housing expenses:		X .28
Maximum monthly housing expense allowance:		= $
Many lenders will not allow you to spend more than 36% of your monthly gross income on long-term debt:
Total monthly debt, not including housing: (This amount includes auto loans, credit cards, child support, etc.)		$
Add housing allowances from above:		+
Total:		= $

In addition to the mortgage you borrow from a lender, normally you will be required to make a cash down payment - a percentage of the purchase price that you pay for the home. Conventional loan down payments range anywhere from 5 to 20 percent, depending on the requirements of your lender. There are also specialized loan programs that allow for as little as 3 percent down for those who qualify. A higher down payment often allows the lender to be more flexible with a loan package, including interest rates and closing costs. In addition to the down payment, you will need to have enough cash available to pay closing costs.