How Much Can You Afford? - 19 Action News|Cleveland, OH|News, Weather, Sports

How Much Can You Afford?

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By Barbara B. Buchholz, Studio One Networks

Do you know how much house you can afford?

Deciding that you have to have a certain size house on a certain size lotand in a certain neighborhood is great. But if it means struggling to make endsmeet, you should downsize your dreams sooner rather than later.

How much you can afford depends on interest rates, how much debt you'recarrying, and how much you have to put down on a home.

If interest rates are around 10 percent, you have no other debt, and youhave20 percent in cash for a down payment, you can buy a home for about 2 to 21/2 times your gross annual income. If interest rates are at 8 percent, youcan spend perhaps 3 to 3 1/2 times your income. If interest rates fall belowthat, the numbers get even better.

The easiest thing in the world to do is pay a visit to a local lender andgetpre-qualified or pre-approved for your home loan. Or, you can click onto ourmortgage calculator and get a sense of how much you can afford to spend.

Being pre-qualified means you tell your lender how much you earn, how muchyou owe, and what you have in cash and assets. Being pre-approved means yourlender has verified your information, pulled a credit report, and committedto fund your loan should it appraise out in value.

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