When buying a home it is important to know what range of prices you can afford. The first step in finding a home is figuring out how much you can afford to spend. We'll look at six different factors to consider when making this decision, with three of them related to mortgages, and the other three focused on broader personal considerations, such as how long you plan to own the home.
Taking out a mortgage is probably the biggest hassle facing prospective home owners. The bank will want to ask you all sorts of nosy questions about your income and savings (or lack thereof), and then might not even lend you as much as you need. The nerve!
Of course, there is a reason for this. Put yourself in the bank's shoes: If you were going to lend people money, what would you want to know about them? Basically, you'd like to know 1) if they make enough money to pay you back, 2) if they've been trustworthy in the past, and 3) if they have something of value should they be unable to pay you back.
Read the entire Fool Article.