Unfortunately, a very small percentage of Americans actually own their home, most of us finance our home over the course of several years. Popular finance terms are 30 and 15 year loan terms. However, even if you are financing your home you are still considered a home owner in most peoples eyes.

Many people who think they are ready to buy their first home have no clue how much house they really can afford. A little over a year ago banks were pre approving home buyers for thousands of dollars over what they could really afford. The way banks calculate how much house you can afford doesn’t take into account all the activities not reported in their formulas.

So how much house can you really afford? To find the solution to this equation you first need to create a simple budget. You need to realize how much money you make and how much money you spend in a month. Be very realistic in your budget amounts. If you know you can’t live without the $400 entertainment budget then include it, you don’t want to buy the house and the realize you don’t want to give up your daily coffee habit for a house.

The nationally syndicated radio personality Dave Ramsey will tell you not to spend more than 25% of your income on your house paymnet based on a 15 year fixed mortgage.  Others will argue you can afford more but all of these numbers are based on opinion and averages. Your personal situation may be completely different.

When you are calculating how much house you can afford don’t forget some mandatory items that come with a house. Items such as home owners insurance, property tax, maintenance and repairs, increased energy bills may skew your numbers quite a bit

This in turn means that just because you can make a rent payment of $800 per month doesn’t mean you can make a house payment of $800 per month. As I just mentioned there are many other expenses that come with home ownership be sure to include these in your budget.

Don’t stretch yourself too thin just to buy the house. Some people may try to tell you to buy the most expensive house you can afford even if it means some sacrifice. Your salary will soon increase and the payment stay the same so it will get easier with time. This just doesn’t prove to be true. Don’t try to predict the future, only buy what you can afford.

Before you purchase your new home carefully consider all these tips. Forclosuer is a very nasty process so don’t take a risk you really can’t afford. Know your finances inside and out before you sign the lines on the home mortgage!

The point of this article is to let you know it’s okey to be picky when buying or building your first or next home. A hose is an investment, but it’s also your home and you need to enjoy living there. Just like anything else in life if you aren’t happy with something, you’ll constantly be searching for something else and it’s not simple to switch houses.

Before you purchase or build your next house I would suggest making a list of everything you like and dislike in your current home or apartment. If you don’t like something now you won’t like it in a different house. You should also research floor plans and layouts online or in books. Also visit open houses in your city to get actual visuals of houses and again list things you like and dislike about these homes.

When you are ready to buy don’t get in a hurry. There are probably hundreds of homes in any give area that are for sale. If you have to visit each of them before you make your decision. This is especially important if you plan to stay in the home a long time.

After you find your dream home if there are a few things the home doesn’t have, try to negotiate with the seller about taking care of those things. For example if you want ceiling fans in every room add this to the contract, you may get these small things taken care of by the seller before you move into the house. A motivated seller will sometimes go out of their way to close the sale of their home quick.

Remember this will be where you live so make yourself happy. If given the opportunity, don’t settle for second best when it comes to your home.