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Calculate Your Way to a New Home

This article is part of our Subprime Survival Guide.

Welcome to spring! It's been a bit slow in coming -- I'm looking out my window in the Northeast at a snowy lawn. But real estate professionals and people looking to sell their homes are chomping at the bit to get started with the annual uptick in open houses and buyer interest.

If you're looking to buy a home, many believe you couldn't have picked a better time. The National Association of Realtors recently released a forecast calling for an unprecedented drop in housing prices during 2007. Home builders like D.R. Horton (NYSE: DHI  ) , Centex (NYSE: CTX  ) , and KB Home (NYSE: KBH  ) have been reporting falling profits, giving buyers more leverage to get sweet deals. With standards for mortgage loans getting tighter, on the other hand, you'll want to be prepared by knowing what you can afford before you start shopping.

Tools you can use
That's where our Foolish home calculators come in handy. If you're looking to purchase a home, the home affordability calculator will tell you how much you can afford to borrow on a mortgage loan, given your current income, savings, and other debts. By giving a range of possible outcomes rather than an artificially precise number, you can gauge how aggressive you're being if you decide to stretch your budget to buy a nicer home.

You'll also find a calculator that explains how adjustable-rate mortgages work. This will warn you about potential increases in your monthly payments once your rate begins to adjust, letting you know in advance whether the risk of higher interest rates will force you into a bad situation a few years down the road.

Backing up your decisions
These calculators don't just give you figures and statistics. You'll also find a number of useful tools to help you make key decisions, whether you're looking to buy a house or you already own one. Whether you're comparing fixed and adjustable mortgages, trying to pick the right mortgage term, or determining if you'll be better off buying or renting, all you need to do is get the numbers and enter them into the calculator. We'll do all the rest, not only giving you an answer but also explaining it with background information to help you understand the basis for that answer.

These tools aren't just for new homebuyers. With many current homeowners looking to refinance in order to lock in low fixed rates, you can get help with deciding whether refinancing is smart or whether it makes sense to pay your mortgage down.

So no matter whether you're house-hunting now, thinking about making the leap to home ownership, or already a homeowner, take a look at the Foolish home calculators. But don't stop with the numbers. Our Home Center provides useful resources to help guide you through the entire process of buying or selling a home, including financing, negotiating with sellers, and how to find the home that's right for you.

Fool contributor Dan Caplinger got a chance to use these calculators earlier this year. He doesn't own shares of the companies mentioned in this article. The Fool's disclosure policy is like a roof over your head.


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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