Are You Ready To Buy?

Most people who rent the home in which they live could afford to buy a home with the right planning. This calculator can be helpful - Rent vs. Buy Mortgage Calculator.

In order to know about your homebuying potential, it will be useful for you to take a look at your income, savings, monthly expenses and debt. All of these are important factors in how much mortgage you can afford and also in how purchasing a home can affect your monthly budget.

Together the following four categories are a guide that will give you a better understanding of your financial situation. Just print this page, and fill in the blanks for each of the categories listed. Then visit Ginnie Mae's Affordability Calculator to help determine how much house you can afford.

Review your income

Purchasing a home may require that you have a certain amount in savings that can be applied to your down payment and closing costs. If you don't have a lot of cash available, there are loan programs available (especially through FHA and VA mortgage programs) that do not require much cash payment at closing.

Some questions to consider:

• On average, what is your monthly income?
• Will your income remain stable in the near future?
• Are you expecting any increase or decrease in income in the near future?

Here is an example of some income categories to help you estimate your monthly income:

Income Category	Monthly
Borrower's Salary	$
Co-Borrower's Salary	$
Taxable Interest	$
Investment Dividends	$
Other Income	$

Review your savings

A little savings can help a great deal when planning to purchase a home. There are some costs that you cannot finance through your loan; you have to pay those at closing, the day that you buy your home.

Some questions to consider:

• What portion of your income are you saving?
• Can you save more money than you are now?

Here is an example of some savings categories to help you estimate your monthly savings:

Savings Category	Monthly
Savings Account	$
Checking Account	$
Retirement Fund Contributions	$
Stocks, Mutual Fund Investments	$
Other Savings	$

Monthly expenses may increase

The purchase of your home will likely change how much you will need to spend on expenses every month. If you have trouble saving now, your finances may be too tight with the purchase of a home.

Some questions to ask yourself:

• How will the purchase of a home affect my monthly budget and my ability to save?
• Can I support the additional expenses that the purchase of a home will bring?
• Do I expect to maintain a stable income for the foreseeable future?

Here is an example of expense categories to help you estimate your monthly expenses. This can be useful to determine your current monthly expenses and to estimate how these expenses will impact your budget.

Expense Category	Monthly
Utilities	$
Car Expenses	$
Insurance	$
Medical Expenses	$
Clothing	$
Taxes	$
Entertainment/Purchases	$
Child Support	$

Review your debt responsibilities

Consider how your debt, in relation to your income, will influence a lender's decision on your mortgage loan amount. Carefully consider how additional debt from house payments, on top of your existing debt, will restrict your lifestyle. Some questions to ask yourself:

• How much debt can I afford to manage comfortably?
• Will I be able to manage my debt responsibilities through the life of my loan?

Here is an example of debt responsibilities to help you estimate your monthly expenses:

Debt Category	Monthly
Credit Card	$
Car Loans	$
School Loans	$
Alimony	$
Child Support	$
Other Personal Debt	$