5 Ways to Know the Home You Can Afford

Having your own home is a very important milestone in anyone’s life, and it’s a decision that requires careful planning because not only does it cost a lot, but it’s also a place where you’ll live and reflect your style the most.

Gather around the most important people in your life because having other opinions may improve the decision making process for determining the type of home you can afford. Remember: if their opinions really matter, be sure that you listen to what they have to say.

1. Know Your Budget
How much is in your savings account ? How much of it are you able to afford and comfortable with spending for your dream house? Do you have any assets in your name? If yes, are you willing to sell any of these to increase your budget for home purchase or construction? If not, start saving for your down payment.

Are you comfortable with taking a loan? Obtaining one will greatly increase your budget, but of course that depends if you have someone to borrow funds from in the first place. Do you think any of your relatives or friends will be willing to lend you money at ideal rates?

What about your credit score? Are you a good or bad credit risk? Your FICO score will determine how much you’ll be able to borrow from any loan provider and what rates you’ll be charged with. Check your credit score, if you haven’t done so yet.

2. Determining Construction Levels and Methods
If you wish to buy a house that’s brand new and ready for occupancy, be prepared to spend a hefty amount of money on it. A secondhand house will cost less but will still require expenditures for renovations.

Buying an empty lot and then having your own house constructed? If you are interested in this method, you have yet another option to choose from: have a construction team build your house or use a DIY method? The former is more expensive, but the latter needs you to comply with more requirements.

3. Where to Build Your House
The area in which your house will be located also has a considerable impact on its price tag. Naturally, expect costs to rise if you’re going to build your home in a high-end locale. Costs could go lower in certain areas of the city, but your comfort and safety could also be compromised.

If you’re single, you might want your house located within or near the city to avoid hassle getting to your office or the mall. If you have a family, you might want something in the suburbs or somewhere similar – anything that’s considered as good atmosphere for raising kids.

In the end, just make sure that your house is conveniently located near your workplace or school and in a neighborhood that you feel comfortable belonging to.

4. Big or Small?
Naturally, size matters when talking about homes. So how big or small do you wish your future home to be? If you’re living alone, a huge house might not be practical…unless you’re planning to marry and have a family in the near future. Conversely, something small might not be so cute if you’re going to move with your family.

Extra space might also be needed if you own more than one car or desire to have your own pool or garden.

5. Choosing the Style
Last but not the least is the style. Do you want your dream home to resemble a French chateau, a contemporary glass house, or a Mediterranean villa?

When choosing the style of your home, there are several factors to consider such as how many floors you wish your home to have, what kind of materials you’ll be using, and whether you want to build something that’s environmentally friendly and energy-efficient. Be aware that designing with environmental safety in mind could award you with various tax benefits and privileges.

These five steps will help ensure that you end up with exactly the type of home you can afford. Once you’ve painted a complete picture of your future home, ask for second opinions once more to further validate that you’re making the right choice.

[image from bitterly hopeful]

Tags: buying a home, building a home, home cost