House Hunt: Know Your Price Range

"Now is the time to buy," has been the real estate catch phrase over the past few years.

With the increased amount of bank-owned properties hitting the market, buyers have an opportunity to scoop up some good deals. But, as the economy has evolved in the past six to seven years, hopefully buyers will maintain some caution as to just how much house they can afford.

So, how do you know how much you can afford?

This can be figured on at online calculator, like one at BankRate.com, but the rules are pretty straightforward. Your total debt-to-income ratio should be 36 percent or less, and your housing payment-to-income ratio approximately 28 percent. So if you know your monthly income and expenses, it is not that difficult to calculate.

For a better understanding of the calculation, let's take a look at the following hypothetical monthly family budget:

• Total Gross Monthly Income: $5,000
• Rent: $1,200
• Car Payments: $400
• Credit Card: $200

Based on the the income and expense percentages above, the family can afford — and the bank would likely approve — a mortgage payment of up to $1,400 (28 percent of $5,000). However, they first need to pay off their credit card bill, because their total debt-to-income, as shown, would exceed 36 percent with an added $1,400 monthly payment. Depending on factors such as how much they could put on a down payment, interest rate and term, a $1,400 mortgage payment will buy this family a home in the $150,000 to $200,000 price range.

Check out this single family home for sale in Dunedin:

• 1459 Ruth Road is a few blocks from the Pinellas Trail in the Lakeside Terrace subdivision. It features:
• Three bedrooms, two baths, and more than 2,700 square feet.
• A large family room, in-ground pool and spa.
• It is listed at $165,400.
• It is valued at $192,673, according to county records.

Contact Stonebridge Real Estate Co, Inc., at 727-403-5208 for more information.