How much can I afford without becoming house poor?

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Massachusetts and the
Boston, MA Region

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Homefinders Real Estate
79 Oak Street
Foxboro, MA 02035
508-698-3713 (Office)
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info@masshomefinders.com

HOUSE POOR

If too much of your income goes to paying for and maintaining your house so that you do not have money left over for other expenses, we call that "house poor". Therefore, most people buy a monthly payment. Which means you take the amount you feel comfortable spending per month on housing (such as what you spend on rent) and convert that number into a mortgage amount. Then add that to your down payment and this is the amount you are willing to pay for a house. Below is a worksheet that you can print out and use to help you figure out how much of a monthly payment you can afford.

HOW TO ESTIMATE WHAT YOU CAN AFFORD IN MONTHLY PAYMENTS

REVENUES:

Take-home pay---1st Salary

---2nd Salary

Alimony/Child Support Income

Interest Income

Other Income

Sub-Total---Income

EXPENSES:

Utilities**

Telephone

Car Payments

Food

Clothing

Insurances

Laundry

Entertainment

Charity

Education

Savings

Repairs**

Lawn Care and Landscaping**

Alimony/ Child Support Payments

Other

Subtotal---Expenses

CASH AVAILABLE:

Revenues [from (A)]

Less 5%-15% Cushion for Emergencies

Less Expenses [from (B)]

Equals-Cash Available for Housing

_____________

_____________(A)

_____________

_____________(B)

_____________

** Estimated for new home

Take the "Cash Available for Housing" number and minus out the Property Taxes and Private Mortgage Insurance (PMI) (if required). This will give you a good idea on what you can spend on Principal and Interest (PI). Take the PI and convert it to a mortgage amount. Then add to that your down payment and this is the amount you are willing to pay for a house.

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Area served: Abington, Attleboro, Berkley, Bridgewater, Brockton, Canton, Dighton, East Bridgewater, Easton, Foxboro, Franklin, Lakeville, Mansfield, Middleboro, Norfolk, North Attleboro, Norton, Norwood, Plainville, Randolph, Raynham, Rehoboth, Sharon, Stoughton, Taunton, Walpole, West Bridgewater, Westwood, Wrentham