The way you decide to upgrade your kitchen depends on what you currently have in place. To go along with this, upgrades must be based on your budget as well. For instance, you may want to hang new cabinets. This is a great way to upgrade your space and effectively increase the value of your home, but at the same time you need to consider all of your options. Are you going to buy basic, pre-made cabinets from a large hardware store? Or will you spend the extra money on custom cabinets?

One of the best ways to upgrade your kitchen without spending a lot of money is to do the work on your own. Do you know how to hang cabinets? Can you lay new flooring? Even if you don?t have experience you can learn as you go along if you have the right tools and a little bit of guidance from a professional handbook or video.

To increase the value of your home you should consider upgrading your kitchen. Believe it or not, you don?t have to spend an extraordinary amount of money to make your kitchen a more enjoyable and valuable space.

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Many people are interested in buying a home right now while housing prices across the nation are low. However, they have learned their lessons from the problems of the recent past and definitely want to make sure that any home they do buy is a home that they can actually afford. It’s obviously important to figure out what you can realistically afford to pay for a home so that buying a home doesn’t get you in to big financial trouble. Unfortunately this type of important assessment isn’t actually that easy for the average person to figure out. Following you’ll learn about the different things that you need to look at when you are trying to determine how much home you can afford to buy.

Debt-to-Income Ratio

One of the first things that you’re going to look at when you’re trying to determine how much you can afford to pay on a home is your total debt-to-income ratio. This is the amount of all of your debt (not just your housing debt) as it compares to all of your income. The magic number that you’ll want to look for is 35; you don’t want to have more than a 35% debt-to-income ratio. In order to determine this, you’ll need to calculate all of your existing debt and weigh it against your income. Any housing debt that you add to the existing debt should not cause the debt-to-income ratio to exceed 35%.

Housing Payment-to-Income Ratio

Not only do you need to look at your total debt-to-income ratio but you should also look at the ratio of the housing payment itself to the income that you earn. You should aim for no higher than a 30% payment-to-income ratio. To determine this, figure out what your monthly income is and make sure that the monthly payment on the home will not put you at a payment-to-income ratio of higher than thirty percent. In other words, about one third of your monthly income (and no more) should be going to the housing payment.

Considering Other Expenses and Changing Income Factors

When looking at numbers like these, you need to make sure to take into consideration a number of other factors that can impact your debt, housing payment and income numbers (as these will clearly impact your ratios). Think about the savings that you’re trying to put away for the children’s college funds or your own retirement. Determine whether your income is likely to change (for better or worse) in the near future. Consider whether any of your debt is going to change significantly (such as when low-interest credit card balance offers expire and higher interest amounts take their place). Re-calculate the above ratios to get a better picture of what amount you can afford to pay for your home.

Considering Other Housing Costs

Remember to keep in mind that there will be additional housing costs when you own your own home. You will need to pay for property taxes and home owner’s insurance. You also need to put money away in case repairs are needed for the home. And you may have additional expenses like fees owed to a home owner’s association. Make sure these get factored in to your assessments.

Down Payment Information

You’ll need to make sure that you have saved up money for a down payment. The more money that you can put down up front the more home you’ll be able to afford. Figure out how much you have and what percentage that is of the home that you want to purchase.

Mortgage Terms

One of the things that you’ll probably need to discuss with a lender before you can actually figure out how much home you can afford is the mortgage loan. You need to figure out how much of a loan you can get and at what interest rate. You will want to determine what length of loan makes sense for you (30-year term for example) and how that changes the monthly payments and other numbers that you’ve looked at.

Resources for Calculating How Much Home You Can Afford

Although these basic rules of thumb can be followed to give you a good idea of how much home you can afford, there are also other resources out there for making this determination. You can look at housing calculators online which are designed to give you this information; bear in mind that they may differ from your real numbers particularly if their source is a lender. You can also work with a financial planner who will be able to run all of the numbers in your life and to give you a good picture of what you can afford to pay on a home.

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An interesting article over at Bigger Pockets recently drew a connection between the increasing cost of gas and the faltering housing economy. In short, it pointed out that as more and more of your money goes to the gas tank, you have less money to invest in real estate property (and to pay the mortgages on already-purchased homes). The author also noted that the cost of housing construction is on the rise as a direct result of the fact that building companies have to spend more money on gas when transporting materials and laborers to job sites.

The cost of gas isn’t likely to go down any time in the near future. In fact, it’s highly possible that it’s going to keep climbing. So this could mean that the eco-conscious individual may have a better chance of doing well in the changing real estate market than does the individual who insists on relying on gas as a primary tool of transportation. In other words, if you invest some money and energy now in finding ways to reduce your fuel consumption, you could be in a better position than your peers to invest in real estate property as time goes on.

To tackle your own finances, it might be wise to invest in alternative fuel options such as hybrid and electric vehicles. To tackle the rise of housing construction, it could be smart to start looking into partnering with green construction companies that are already starting to implement energy-saving and money-saving practices in their work. By making the changes now, you could start saving money so that you have something tangible to invest when everyone else is trying to figure out how to fill up their tanks at $5 per gallon.

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There is a new loan option available to people which is being advertised as an alternative to the reverse mortgage loan. It is called the REX loan. The main difference between the two loans is in the ownership of the home. With the reverse mortgage, you remain the owner of your home but you use home equity to receive income payments. With REX, you essentially enter into a partnership that says you will split the proceeds of any future home sale with the company that has partnered with you.

The reverse mortgage loan is designed as an option for seniors who are at risk of losing their homes because it’s too expensive to maintain them. They opt to take out a home equity loan which gives them lump sum and/or monthly payments. Those payments are taken out of the money already paid down on the home. This means that if the individual decides to sell the home later, the mortgage money will have to be paid back to the lender before profits of the home sale can be obtained.

In contrast, REX lets you partner with a lending company in the ownership of your home. You get a lump sum payment up front and sign an agreement to split the proceeds of a future home sale. When you move you give 30, 40 or 50% of the sale to the lending institution. There is no requirement that you move at any certain time so you can remain in the home and enjoy the lump sum payment as long as you would like. The drawback, of course, is that you are giving away a percentage of the value of your home.

It’s not clear yet whether the REX is a good alternative to the reverse mortgage for all people. Both may provide lump sum payments, and both may result in money of a home sale going to a lender. However there are different terms and benefits of each so a homeowner should review both options before moving forward with either type of loan.