How do I know if I can afford to buy a house?
I want to buy my first home but I don't know how to figure out what I can actually afford. How much income do I need? How big a down payment? What's a reasonable monthly payment compared to my salary? What costs do people forget about when buying a house? How do I avoid buying more than I can handle?
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2 Answers
The biggest financial mistake I see people make is not having an emergency fund. Before investing, before paying extra on debt, save 3-6 months of expenses in a savings account. This protects you from going into debt when unexpected things happen.
Get a free copy of your credit report once a year from annualcreditreport.com — the real free one, not those 'free' sites with monthly fees. Check it for errors. Mistakes on credit reports are way more common than people realize.
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