Monday, November 1, 2010

Maryland Real Estate Authority

Maryland Real Estate Authority

How Much of Your Income Should be Spent on a Home?

Posted: 01 Nov 2010 02:00 AM PDT

Before things got challenging in the housing market, some people felt that when buying a home, consumers should take out the biggest home loan possible. If you qualified for a home loan that exceeded your ideal loan amount, friends, family and some lending institutions would encourage you to get the largest loan possible.

You may even still here this advice today, but now with the changes in the economy, cooler heads usually prevail. Now homebuyers are definitely being encouraged to buy a home that they can afford and not to buy larger with the thought that their income will increase.

In fact, some financial experts used to tell people that they could spend a third of their take-home pay on housing expenses, while others would advise not going above 28% of your gross monthly income. Now those in the know are telling consumers to be even more conservative and not to spend above 25% of their monthly (after tax) pay on housing expenses.

However, there are a lot of great properties on the market these days, so if you find that you need to scaleback on what you would spend, this doesn’t mean that you have to get a home that is somehow undesirable.

If you are looking for a home in Annapolis, top Annapolis realtor John Day can help you find some wonderful properties, like 1635 Cananaro Dr., a 3 bedroom, 2 bath Revells Down home that is priced well below $250,000.
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