Ask a Realtor How Much House You Afford

There are many discussions about how we consider the house: an investment (an asset) or an expense (a liability). Some say we cannot call a residential home an asset because it does not make us money, but, at the same time, if we rent, we end up paying more than the monthly rate we pay if we buy the house on credit.  

There are calculations and calculations that need to be done and analyzed, to know how much house you afford. If you find them too complicated, ask the advice of a realtor to see if your budget can accommodate the price of homes for sale in Erie CO.

What will they tell you?

There are 3 rules (small mathematical calculations) that will help you be prepared for purchasing a home.

Rule of 3

The house you can afford is equal to 3 x your annual income

Rule of 30

The rule of 30 refers to 2 aspects:

Ø  To offer a 30% advance on the purchase of the home

Ø  To offer the minimum advance of 5-15%, and the difference of up to 30% to have it in cash or in a bank account, for crisis situations.

Rule of 10

The credit rate must be maximum 10% of your monthly income.

Calculate and analyze well before buying a house and always try to purchase the one you can afford.