Money Matters

Probably the most important step, and certainly the step you should take first, is to figure out how much you can afford to spend on a new home. If you haven't set up a budget that shows you how much you're spending on everyday things, now is the time to do it.

A good budget will help guide you to the right price range of homes as well as prevent you from spending more than you should on your house. This can happen when the bank says you can afford a certain price range of homes based on your income and debt, but they haven't taken into consideration all of your expensive hobbies, your monthly child care expenses, the fact that your car could die at any moment or your love of international travel. You probably don't want to have to change your lifestyle in order to buy a more expensive home.

By having a handle on your personal budget, you can compare your own numbers with what the bank is willing to lend you to come up with a very manageable mortgage payment that will let you continue the same lifestyle you currently have. Try out this cash flow calculator to help set up your budget.

http://money.howstuffworks.com/house-buying.htm