When house hunting, many look at the amount the note or monthly rent will be. Don't forget that other costs will be there and those can bring your monthly obligation up.

Insurance
Taxes
HOA
Utilities, most people place this in a different category but the house itself plays a part in the cost. That nice larger home may mean larger bills or that fixer    upper you will live in while working on it may have bad seals or no insulation.
Maintenance, another area where the house itself makes a different in your expenses.

How much house can you really afford?

So many people forget taxes and insurance costs. Those are pretty significant, especially in Nebraska. It adds several HUNDRED dollars to our mortgage costs each month. Thankfully, most mortgage calculators have inputs for taxes and insurance so people can calculate that information ahead of time. Property insurance information is found online here so you can look up the taxes on the house you are considering purchasing and add that to your figures.

When we bought our current home in 2008, the seller provided her monthly utility bill costs as part of her seller's information. So we knew approximately what electricity and gas bills would be (but based on 2 people living there rather than a family of 4). It helped quite a bit to have that information.

I believe that doing research into all these areas before you consider a mortgage is important. A bank is in the business of selling loans. They will try and sell a person the largest loan the bank believes is safe. But only the consumer knows his or her financial situation.

We actually were approved for a mortgage amount almost double what we actually borrowed, according to the bank's figures. My husband and I did not feel comfortable with that figure as it made a monthly mortgage payment very high and we felt we would be "house poor" if we assumed that much debt. We also wanted a mortgage that was more realistic if one of us was not working or not working full-time. It turned out to be the right choice to only borrow an amount that made the resulting monthly payment realistic for our budget.

mamasjob:

Those are pretty significant

They can be. I am originally from a flood area where if you have a cheaper/older, fixer upper or mobile home, it is possible for insurance to be as high as the mortgage note. That's doubling the monthly payment!

I think the guideline is 30% of your income and I think that should include mortgage or rent.  Not sure if it includes other housing costs like taxes, or elect, etc.

I think it is crazy to take out a loan for more than 80%.

DavidKimball:

I think it is crazy to take out a loan for more than 80%.

I agree.  When we moved from Idaho to Utah, we sold a 5 bedroom home with a full basement, mature producing fruit trees & a large backyard with a large garden & berry bushes.  The market was down, & we did not get top dollar, but after 10 months the house finally sold.  Had we not owned that home, we would not have been able to hold on to it while DH was unemployed & looking for work.

We told the realtors that the "must haves" were 1) 4 bedrooms, 2) a garage 3) room for a garden & 4) a place for my canning jars on shelves. Apparently, those were unusual "must haves".  It took us a year & a half, & we went thru 3 realtors before we bought the house we now own. The biggest problem seemed to be that the realtors did not understand that a carport is NOT a garage.  My husband maintains our vehicles, & a garage has 4 walls & a door that goes up & down - so he can work on the cars out of the wind & the weather.  The house we bought has 4 bedrooms, a garage, & I have planted a garden & fruit trees & berry bushes, & built shelves in the "cubby" for my fruit room.

When we took out the loan for $65,000 (which was the difference between the $165,000 they wanted & the $100,000 we had), the mortgage person at the bank looked me right in the eye & said that this loan was the smallest that his branch of Wells Fargo had EVER approved - - clearly expecting to embarrass us - -and the look on his face was priceless when we answered together, "Good!".

You should NEVER borrow as much as the bank approves you for in lending.  Buy what you need, not what they want to sell to you.

It took us 7 years to pay off a 15 year mortgage, & own this home, but it is ours.  Besides the monetary savings of not paying interest to the bank, the peace of mind knowing that it will not affect us AT ALL if the government does away with the mortgage interest deduction is priceless.  We could not care less if the "price" of the house goes up or down - - it is not an investment, it is our home.  When my knees gave out & I had to retire, we did not have to worry about how we would make the house payment.

Zohner, wow what a great piece of land you have there. How much was the selling price when you bought it? Something like that here would cost a great deal. I am in CA, go figure.

This is the result of handling money the right way.  You would make a great recorded interview to encourage others.

DavidKimball:

I think it is crazy to take out a loan for more than 80%.

It seems to be asking for trouble, doesn't it?

we could afford payments but I am so glad we don't have any  I pay the insurents yearly and  I budget for it all year long.

we have friends that redid there house a couple  times they are rapidly moving to retirement and they be paying until they die.

we had the cash in the bank when we ever we did anything .