Chapter 3

What Can You Afford to Buy?

In This Chapter

Determining the costs and tax benefits of homeownership

Getting a grip on closing costs

Acquiring and investing the down payment

When you walk into an auto showroom, one of the first questions the salespeople ask (after you pry them off you) is, “What is your budget?” or, “How much can you afford to spend on a car?” Of course, they hope that a large number rolls off your tongue. If you’re like many car buyers, you may be likely to say something along the lines of, “I’m not really sure.”

Many car buyers today finance the purchase — so they allow a banker or other lender to determine how much car they can afford. Such determinations are based on a buyer’s income and other debt obligations.