When you are buying a home for the very first time, it is quite easy to get instantly blinded by wonderful back-splashes, lovely hardwood floors, spectacular countertops, and securely fenced backyards. Generally, we do not consider it bad to spend some extra amount of dollars to buy a house with perfect spacing in a cool location.
Don’t Go Overboard
Before looking at a property seriously, you need to figure out the money you can afford. Yes, there are a few online tools you can make use of, however these tools can only give you the estimates. But, there is more to buying a property, isn’t it?
What is your current rent?
Are you finding it easy to meet that payment? Or is it some sort of a struggle every month?
Generally, the amount of money you can afford now is a very good measure of the amount of money you will be afford in your new property.
Talk to a lender and try to get preapproval for an amount you are sure you can afford no matter what. Bear in mind that it is better to stick to a lower amount rather than choosing one that is on the higher side. Once you determine how much money you will have at your disposal, you are good to start your search for a property. The online tools, like calculator etc, will serve as a guide and will come in handy.
Stay In the Present
If you have been looking for a property for a while, figuring out how much mortgage you can manage to pay will be a great way to go about it. Base this sum of money on your present earnings. You may certainly be in a better financial standing a month or two down the road, but there is no such guarantee. Your wife may expect a huge raise, but that is not guaranteed. As with any other thing in life, predicting your future is of no good here. Hence don’t try to use the projected earnings to compute the money you can afford to repay your mortgage.
Account for Everything
Many of us arrive at a wrong mortgage repayment figure because we tend to fail to account for property taxes, insurance and other allied costs. Bear in mind that, when you buy a house, the amount of money that goes towards mortgage repayment is only a part of the money you are going to afford. You need to factor in all other costs that are related to buying a mortgage such as property tax, insurance, and other associated costs that may be applicable to you (depending on the arrangement you have gotten into with your lender or bank).
Don’t be naive. Being overly optimistic does not help either. Do your homework and all the necessary things related to evaluating a property that you are interested in before putting down that first cent of money.