Can I Really Afford My Own Home?
By Clint Freeman, Realtor, Consultant
(Coldwell Banker Best Realty)
Making a decision to become a homeowner is on the minds of many renters at this very moment. Will we really find an affordable home in a neighborhood that we like? Should we take advantage of the lowest interest rates in 40 years? We're comfortable paying rent at around $1100 per month, but can we really afford our own home at this time? A quick way to find out what you can afford is to do the following calculation. Take your present monthly rent, say $1100, and think of it as a monthly mortgage payment. Assume that generally $330 of that total would be used to pay property taxes, and mortgage and fire insurance each month. Thus, your basic loan principle and interest would total $770. Now, take the present prime lending rate, which now hovers at 4.89%, and apply it to ...
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