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    • Buying A Home, Affordability
    There is a certain amount of soul searching that is often ignored in the quest for home ownership. The first question is usually a statement, "I want a house of my own." Which really should read, "I'd like a house of my own; do I think I should buy one?" And you answer yourself, yes and no.

    I hate to go back to this, but how's your debt which will be termed by the mortgage people as your debt ratio.

    But what should you bring to the table?

    This is your financial life laid bare. Credit checks are mandatory and there is little you can hide from your lender or yourself. Nothing is "overlooked" and everything is considered. So straighten your financial house first and let's look at costs.

    Houses aren't cheap and have been refered to as holes in the ground into which money is constantly tossed. That's just the upkeep horror or the remodel scare.

    Let's assume that you are renting right now. A thirty year mortgage on $110,000 at 7.25% means a monthly payment of roughly $750. Not counting taxes and insurance or furniture or paint or... I could go on. Find a house worth this much and compare it to your current rent standards. Ask yourself some questions. Are going to be in the area more than two years? Are you going to be able to maintain a house yourself, or hire out? Can you live with the costs?

    Here's an easy way to figure how much you can afford:

    Our hypothetical house cost $110,000 with a mortgage payment of $750 at 7.25% for 30 years fixed. If rates go down a quarter of a point, you can buy about 2% more house. If they go up, you buy 2% less house

    Using the same 30 year fixed model and a $1000 a month mortgage payment at 7.25% will get you a $147,000 home. Rate goes up a quarter, you buy 2% less house. Rate goes down, you buy 2% more.

    $1250 per month @ 7.25% will get you a $183,000 home.

    $1500 per month @7.25% will put you in a house worth $220,000

    $1750 per month @7.25% buys a $257,000 home.

    For a complete step by step loan from beginning to end...click here

    Order your copy of Building Wealth in a Paycheck-to-Paycheck World by Paul Petillo. It is packed with safe, proven wealth-building strategies that cover all the major components of a balanced financial plan, including:

    • Straight talk on mutual funds, bonds, real estate, and annuities
    • Techniques for avoiding financial disasters
    • Tools to help readers track their debt and create a plan for staying out of it
    • Road maps to buying a home and saving for college and retirement

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