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Welcome to NerdWallet’s SmartMoney podcast, the place we reply your real-world cash questions — in 15 minutes or much less.
This week’s query is from Steve in Denver. He asks: “I’m seeking to purchase a home within the subsequent yr, however I’m undecided what I can afford. How can I understand how a lot home I can afford?”
Know your housing price range. When finding out how a lot home you possibly can afford, purpose to maintain all debt funds — together with a mortgage — inside 36% of your pre-tax revenue.
Can’t provide you with a 20% down cost? You don’t must. Whilst you’ll should pay mortgage insurance coverage as a commerce off, you will get away with placing as little as three% down.
Even you probably have the money, ask if you happen to’re emotionally ready for homeownership. Having a house might be rewarding, however it’s a number of work. In the event you don’t need to deal with upkeep or don’t suppose you’ll keep in your own home for at the very least three years, you could be higher off renting.
Have a cash query? Textual content or name us at 901-730-6373. Or you possibly can electronic mail us at [email protected]. To listen to earlier episodes, go to the podcast homepage.