Consumer Reports: Buying an affordable home
WEST PALM BEACH, Fla. (CBS12) —
Paying the bills and trying to save to buy a home is difficult.
"We tried to break it into a pie where we were at least saving a certian amount of money every month," first time homebuyer Chiara Norbitz said.
Banks can pre-approve you for a loan, but that doesn't mean you can afford it, according to Consumer Reports. Lenders often look at how much they think you can pay them each month.
"But that doesn't mean you can make those payments and still save for retirement, still save for college and still manage to go on a vacation every year," Consumer Reports Money Editor Lauren Lyons Cole said.
Deciding how much mortgage you can afford is personal, but Consumer Reports' experts say a good rule of thumb is to cap your housing costs at 25 percent of your take home pay.
"You need to have money in case the air conditioner breaks or you need to replace the roof," Cole said. "Owning a home is very cost intensive, so keeping your mortgage payments as low as possible will help you afford everything else that goes with it."
Having trouble calculating a number you can live with? Consumer Reports advises working with a financial planner or a third party you trust.