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Choosing a neighborhood
Bricks and boards may determine the cost of a home, but a neighborhood determines value.

• Consider the identity of the neighborhood. The overall impression given by an area is key to its value. Value is enhanced by other well-maintained properties. Conversely, be cautious of areas with unkempt yards and homes, and businesses mixed in with residences.

• Ask your Agent about the property tax assessment in the area, including any special assessments or pending bond issues.

• Pay attention to neighborhood zoning. Good residential communities are zoned to keep out commercial and industrial users. Ask about other regulations in the neighborhood, such as on-street parking. Find out if this area is governed by any covenants.

• List which community services are important to you. Do you need to be close to shopping, schools or a mass transit stop? Get an idea of the neighborhood's character by talking with people who live there.

Factor in the costs of commuting as you're looking at neighborhoods. If your daily commute to work, school, shopping or other locations will be very long, you may have greater automobile expenses, such as gas, maintenance and insurance

Buying an Affordable Home
Most people have a general idea of how much they feel comfortable spending. It's equally important to know how much your lender calculates you can afford. With assistance provided by your GMAC Real Estate Agent, you'll be able to better prepare the many details required during the financing application process.

• Evaluate your financial situation as the lenders do. Typically, your total monthly housing costs of mortgage principal and interest payments, property taxes and hazard insurance (PITI) should not exceed 28 percent of your gross monthly income. Or, housing costs plus any outstanding monthly long-term debt should not exceed 36 percent of gross monthly income.

• Determine how much your financial institution is willing to lend you. Our Mortgage Calculators and the chart below can help you get a good idea of the capital you'll have to work with, but you should call on your Agent for help during the prequalification process.

• Know how much you can afford in monthly payments. Lenders factor in sales price and down payment, but place more importance on how much you can handle monthly.

• Become a preapproved buyer. Preapproval gives you more buying strength since the lender makes a credit decision and preapproves you for a certain mortgage amount. You'll know what price range your lender will approve -- and you'll be in a position to make an offer as soon as you find the right home.

Mortgage Chart - Your guide to affordabilitey
Your mortgage power may surprise you. This chart shows how much house you can afford at any given interest rate. To use it, simply find the monthly payment you can afford and read across to the nearest current interest rate. The point where the two intersect shows you how much mortgage that monthly payment will buy.

It is important that you obtain a mortgage pre-approval. This is an essential time-saver when you come upon the house you want to buy. Mortgage pre-approval is like securing a loan before you find a house, and it's real peace of mind to know exactly what you can afford.

Payments below are based on a 30-year amortization and include principal and interest only. Ask your GMAC Real Estate associate what to add for taxes and insurance.