Apr
28

Factors that Go Into How Much Mortgage You Can Afford

April 28, 2013

How much mortgage for Chicago new homesA new Equifax Finance blog article,

“What Kind of Mortgage Can You Afford?” encourages Chicago real estate buyers to evaluate how much a home they can afford, not just in terms of mortgage, but total housing costs, and with quality of life taken into consideration. Buyers can easily fall into the “drive-‘til-you-qualify” trap, where they look for the biggest home they can afford; often driving farther and farther out into the suburbs to find this dream home.

The article suggests really prioritizing what is important to buyers and choosing a Chicago new home that meets their needs. For example, the huge yard, two-story foyer, extra square footage and three-car garage may not be that desirable when you  take into account the fact that you may literally spend two hours or more in your car in traffic between work and home (time that could actually be spent with family or doing whatever it is that you want). Add on top of that the extra expense associated with longer commutes (think about rising gas prices, vehicle maintenance, highway tolls, parking fees, etc.). If you could live somewhere closer, take advantage of public transportation and have more free time, wouldn’t that be ideal?

Combine total housing costs (including commuting expenses) to see how much you can afford; the article says a good estimate is around 45 percent of your after-tax monthly income.  Prioritize your home features. You may really need a third bedroom but is a formal dining room absolutely essential? Would you be willing to trade that for a home 15 minutes closer to work? Get more practical tips and advice in the article and find tons more resources on finances, real estate, taxes,

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