Know-How Much Of A Mortgage You Can Afford
Are you unsure about how much mortgage you can afford to pay on a home? If so, then you’re not ready to take the next step until you figure out a few things.
By being sure about how much of a payment you can handle without struggling, you can be confident about going to the next step… Finding a home that meets your budget.
Owning a home should make you feel secure and safe not stressed and worried. You should calculate what you can realistically afford and safely fit into your budget.
Buying a home is usually a very emotional decision and that emotion can sometimes get you into trouble. There’s nothing worse than buying a home because you fell in love with it and then realizing that you really can’t afford it and end up falling behind on payments. This will take years off your life and can easily be avoided by knowing what your budget is.
Think Ahead.
Lenders and mortgage brokers don’t know and don’t really care about future plans that you may have for your personal life. Only you know what’s coming down the road.
Are you planning to have more children, kids are expensive!
Do you have a teenager that will be heading off to college soon?
Are you thinking about returning back to school yourself?
How secure is the job that you currently have?
All of these things and a million more can have a drastic effect on your income which is why you need to look out a bit further on the horizon when considering homeownership. In addition to factoring in your lifestyle and what you want to accomplish, here are some guidelines that will help you to determine a budget you can afford.
1- Figure Out Your Budget- Write down every monthly expense that you have on a piece of paper and be sure to not leave anything out no matter how insignificant you might think it is. Make sure to also include future trips and vacations that you plan on taking that year.
See how much is left over to pay the costs associated with owning a home like a mortgage, insurance, property taxes, utilities, homeowners association dues, yard maintenance, pool maintenance, etc.
Just by doing this exercise alone, you’ll have a much clearer picture of what your budget for owning a home will be. Most people are usually very surprised to see how much they spend in a month and not in a good way. The number is always much higher than people expect it to be.
2- What’s Your Down payment? The more you put down on a house, the lower your monthly payment will be. However, the lower your down payment is the bigger your loan amount will be and your monthly payment will also be higher.
Another thing to consider is that loans that require less than a 20% down payment will usually require that you pay private mortgage insurance or “PMI”. This insurance protects the lender against default and can easily add on another 2 or 3 hundred dollars to your payment.
3- Use A Mortgage Broker. Getting a loan without using a mortgage broker is like buying or selling a house without hiring a realtor. And just like when you’re looking for a good realtor, you should research the mortgage broker to see what his track record is and see if they have any online reviews, etc.
Once you find a good mortgage broker, he or she can be instrumental in getting you a mortgage that meets your needs. They should also be able to help you to figure out your monthly budget in addition to helping you navigate through the mortgage shopping process.
