Buying a Home You Can Afford
Remember, the amount of home you are pre-approved for doesn’t necessarily mean that that is how
much house you can actually afford. A standard rule suggests spending no more than 28% of your
income on your monthly mortgage payment. If you have more monthly expenses, you could find
putting 28% of your income towards your mortgage payment each month more difficult than you’d
For instance, say you make $5000 a month. 28% of that would be $1400 per month and, in theory,
would leave you with $3600 to use towards the rest of your monthly commitments. That seems doable
if you have a minimal car payment and insurance. However, let’s say you purchased a very expensive
car with a monthly payment of $800. And you also have monthly commitments that total $780 ($200
cable and internet, $10 Netflix, $20 magazines, $150 phone, $200 insurance, $200 utilities) and that
doesn’t include food, going out, or debts such as credit cards. In this situation spending $1400/month
on a home may be stretching it a bit thin.
Keep in mind your current spending habits and decide if you want to cut back to afford a larger home or
if a less expensive option is best to continue to support your shopping habits. You want to be able to
buy that awesome pair of boots or take expensive vacations, doesn’t mean you can’t buy a house, you
should just consider all your options to maintain your lifestyle.
Take into account that owning a home comes with extra expenses. You are now responsible for paying
for home repairs and depending on if you move into a bigger home the utilities may be higher.
Buying a home can be the most exciting and largest purchase of your life! Just remember, the full
amount you are approved for may not be the amount of house you need or can comfortably afford.
Blog Archive2018-07-23 14:09:15
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