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How Much Can I Afford?

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Buying your own house is always a dream shared by many people around the world.

However, before you begin buying your own house you need to understand how much you can afford, start shopping for a mortgage, then making an offer, and ultimately closing on your new home.

Before deciding to buy your own house, you need to understand first your financial status so that you can budget your money properly.

A better understanding of your income also allows you to know how much down payment you’ll need and what current interest rates are for different types of loans.

Credit Report Matters

Before you start your loan, you must know first your credit status.

A credit report is necessary since it will determine what interest rate you will be offered.

To secure a lower interest for your housing loan you need to have a high credit score

If your credit score is low, no need to worry just take the necessary steps to improve your score.

20 Percent Down Payment

Based on actual studies, the majority of mortgage companies want 20 percent of the purchase price as a down payment for financing.

If by chance you cannot afford a 20 percent down payment, the first recourse is to pay a higher interest rate.

Some companies also ask their clients to put up an escrow account. An escrow account is an account held in the borrower’s name to pay obligations such as property taxes and insurance premiums.