Buyers in Today's Market

One of the challenges in today's marketplace is finding the home that you can afford. The temptation is always there to go large, but going large may not be the best investment or financial decision.

You will always have the best resale market in the price range that the median income buyer for the area can afford. If you buy a big house, you have just limited your market. Big houses are for long term ownership and creating a home - not for resale investment with a quick turnaround.

What the median income buyer can afford is based on a couple of variables.

One, what are the current interest rates offered for home loans and...
Two, what other debts need to be paid on a monthly basis.

To comfortably afford the payment on a home, as a rule of thumb, the payments should not exceed 35% of your gross monthly income and the overall debt payments (including the mortgage) should not exceed 45%. Staying in these ratios may limit your choice initially, but in the long run, they will help ensure that you can remain securely in your home until it is time to move on up.