Albuquerque First Time Home Buyers: Part Two, How Much Home can YouAfford?

.Once you decided that

Buying a Home in Albuquerque

is right for you the next step isto make sure your financial house is in order.There are two questions you'll need to answer before you go home shopping: 1) Howmuch can you afford in terms of a monthly payment on a house? and 2) How large amortgage can you qualify you for?

How Much Home Can You Afford

If you don't already have one, you should create your household budget. There aremany resources online to help you.Home Budget for Dummies is one that you'll have to pay for, or FreeFinancialAdvice.netis another which is free. If you've never done abudget before, you'll want to start by tracking very closely everything you spend out of pocket in a month. Then you'll want to consider what you spend on your current housingand utilities, your car payments and insurance, your credit cards and other expenseslike student loans.Once you have a grip on your budget you can use an online payment calculator toestimate how much house you can buy and stay within your budget. There is anexcellent tool at

CNNMoney.com

. All you have to do is plug in some numbers and it willcalculate an affordability range for you. You'll have to enter your annual income, your down payment (how much you have saved or can get from family to put down) and your monthly debt. You'll also have to estimate a couple of things like mortgage rate-I'd put in6 % right now, it might be a little high but better to overestimate than underestimate, andproperty taxes-estimate 1% of purchase price for the price of the home you want. By theway, if you haven't saved much for down payment then check out this zero-downprogram offered by theNew Mexico Finance Authority.This should give you an idea of how much you can afford and how much house youwant to buy. But you're not done yet. The next step is to meet with a lender.

How Much Home Can You Qualify For?

Now it's time to meet with aReputable Albuquerque Lender to see how much you canqualify for. You'll want to bring documentation with you such as tax returns for theprevious two years, W2's, and recent paycheck stubs. You should also bring your budget along with a record of all your debt. The loan officer you'll meet with will want toplug these numbers into their desktop approval program to see how much you willbe able to borrow.Once they have received approval they will issue a prequalification letter. This isimportant, this is your passport to go look at homes with a Realtor. You'll also need toinclude it when you make an offer on a house. ________________________________