When you have enough money to purchase a home, you may find that the homes that are on the market are not as affordable as you might have hoped. Under these circumstances, there are many things you can do to increase the odds that you'll be able to find a home that you can afford, and that will also be your dream home. 

Considering Your Options

One of the first things you should do is find out how much you will be paying each month based on your monthly mortgage rate and the average local taxes. You'll also want to look at the cost of renting vs. buying a home. You'll also want to look at the refinance calculator to see how much your new monthly payments will be if you choose to refinance. 

Determining How Much You Can Afford

If you're not sure if you'll be able to afford a particular home, look at a debt-to-income ratio calculator. Your debt payments should not be greater than 36% of your gross income. Lenders typically want to follow this guideline because it is the amount of debt that lenders have found that borrowers are typically able to pay.

Making a Down Payment

The larger the down payment you can make, the less expensive it will be to purchase your home in the long run. The down payment will reduce the amount of interest that you'll need to pay and will also allow you to avoid purchasing mortgage insurance. If you make a down payment that is lower than 20%, you will have to purchase mortgage insurance. 

Even if you believe you can afford a home, you should take into consideration other debts you might take on. For example, if you intend to go to college and take on student loans, factor this in when determining how much of a home you can afford. 

Choosing the Right Loan

The typical type of interest rate is a fixed rate that will remain the same for the duration of the loan. This is most often chosen because it is the most straight-forward type of interest rate. However, if you would like to save money in the short-term and if you are expecting to have a higher income in the future, one option is to choose an adjustable-rate mortgage. Then, you will pay a lower rate initially, and the rate will only increase after five years. If you're not sure which option is best for you, consult with a real estate agent

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