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Manuel Brown's Blog

By Manuel Brown (312) 600-5710 | Broker in 60640

How do you determine how big of a monthly payment you can handle?

Another great question asked of Real Estate Professionals by Trulia Chicago.



To arrive at an "affordable" home price follow the guidelines of most lenders. Allow a total debt-to-income ratio of no more than 36 percent. And assume a housing payment-to-income ratio of 28% for our conservative estimate, and 33 percent for the aggressive one. Before buying, note you should also factor in other savings needs, including retirement and college. 

During this time the entire time do not open any new lines of credit whatsoever until after you have closed on your new home.
 

Referenced from CNNMoney

Comments

By Gary Youngman,  Thu May 16 2013, 14:28
How many people follow this formula?
By Manuel Brown (312) 600-5710,  Thu May 16 2013, 14:34
Gary,

I totally understand what you are saying. What we can do as real estate professionals is to provide homebuyers with the tools. It is up to them to use them or not.

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