How Much Home Can I Afford In New Orleans?

With higher prices and stagnate paychecks, many Americans see affordability is a major issue when it comes to buying a home. In a major city like New Orleans, saving up for a home can be difficult.

This article will tell you how to determine how much home you can buy in New Orleans.

There are many affordable homes in large metropolitan cities like New Orleans and others, but it depends on what you’re looking for.

Here’s How Much House You Can Afford In New Orleans (Calculator)

People buy more house than they need for several reasons:

• Bad advice from Realtors
• Keeping up with the Joneses
• Resale purposes

Let’s talk about each of these a little bit before we move into what homes cost in New Orleans:

Bad Advice From Realtors

Real estate agents play a vital role in the homebuying process, but you have to know when they’re in and out of their lane. 

A Realtor has no business telling you how much house you can afford. That’s what a lender is for. A Realtor should only advise you on what type of home you want.

Still, many people listen to Realtors who are out to make a buck. Some of them will tell you that you can afford the home by this strategy and that strategy, but the truth is, it may be a bad deal.

Keeping up the Joneses

This is the worse reason to buy a big house: To keep up with your neighbors, friends or other family members. 

If you are vain enough to buy a huge home because of someone else’s situation, then you’re the type that will end up with bad credit because you’re paying too much for your home, car and appliances.

Resale Purposes

Some potential home shoppers want to buy a home because they think that appreciation is going to let them double or triple their money (again, bad advice).

That’s not the reason you should buy a home. You should purchase a home because you like it, the way it looks, feels and speaks to your sensibilities.

The resale market is too unpredictable to base such a big purchase on, especially if you’re not a seasoned investor.

So, how much home can you afford? Here’s how to find out:

Multiply Your Annual Income

To find out how much home you can afford, you would multiply your annual income by two or three.

Let’s say you make: $50,000 a year. That means you could afford a home that costs anywhere from $100,000 to $150,000.

Of course, this will be affected by two things:

• Interest rate: The percentage that is paid by borrowers for the money that they borrow.
• Credit score: A three-digit number that indicates to banks and other lenders how likely you are to repay debt.

Here Are 5 Ways To Determine How Much Home You Can Afford

Answer these questions:

• 1. How much is your annual income?
• 2. How much is your downpayment?
• 3. What ZIP code do you want to live in?
• 4. How much are your monthly expenses (food, clothing, mortgage, etc)?
• 5. What is your credit score?

Here’s a mortgage calculator to help you:

How Can I Calculate How Much Home I Can Afford?

https://www.mortgagecalculator.net/embeddable/v2/?size=1
Powered By www.MortgageCalculator.net

Other Factors That Determine How Much Home You Can Afford

Another factor that will indicate how much house you can afford is your expense-to-income ratio. 

Front-End Ratio

This is how much your monthly expenses are vs. how much income you bring in. Banks like this number, commonly called a “front-end ratio,” to be between 28 and 30%. 

Your mortgage lender will look for your mortgage payment and PMI (private mortgage insurance) to all be around 28% of your income.

Debt-To-Income Ratio

You’ll also need to have a relatively low debt-to-income ratio to get the home you want. This means that the amount of debt you’ve borrowed and  paying back is not gobbling up most of your income.

Banks like your debt-to-income ratio to be around 36% typically.

Are You A Veteran?

If you have served your country, the Department of Veterans Affairs (VA) offers home loans and grants to help you buy, refinance or renovate your home.

For ex-military and their surviving spouses, the VA guarantees part of the loan, meaning they will cover a portion of the loan if you default. Learn more here.

30-Year-Loan Or 15-Year Fixed?

If you have a choice, you may be wondering which is better: A 30-year mortgage or a 15-year mortgage?

The truth is that both have their advantages. A 30-year mortgage would typically mean a lower monthly bill because the payments are spread out over more years.

The bad part is that you’ll pay a lot more in interest over those years.

For a 15-year fixed, the interest rate is lower and you’ll pay off the principal faster.

The bottom line is if you can afford to do a 15-year mortgage, you should!

Are you looking to buy a home in Atlanta? If you’re selling your old home, there are some things you’re going to need right off the bat:

• A fresh coat of paint
• Freshly manicured lawn
• Latest home trends

Once you’re all set in those areas, you’ll be ready for New Orleans’ real estate scene.

Final Word

When it comes to getting a home, you should always make sure that you’re pre-approved for a mortgage before you begin your search.

And before you choose a lender, make sure you read the reviews.

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