June is National Home Ownership Month!
Avoid Buying More Home Than You Can Afford
It’s so easy to fall madly in love with homes that might stretch your budget but overextending yourself is never a good idea. It’s vital to find out how much you can safely spend on a house before starting to shop. With home prices trending upward, it is especially important to stick close to your budget. Also keep in mind that the cost of homeownership is more than your mortgage payment. You must also factor in insurance, home maintenance, unforeseen expenses, and in some cases HOA fees and special assessments.
Buying more home than you can afford can put you at higher risk of foreclosure if you fall on tough financial times. You will also have less room in your monthly budget for other bills and expenses.
Instead, focus on the monthly payment you can afford with all the other considerations rather than focusing on the maximum loan amount you qualify for. Just because you can qualify for a $300,000 loan does not mean it is the best financial decision for your situation or that you can afford the monthly payments that come with it in addition to your other financial obligations.
Every borrower’s financial situation is different. The best thing you can do, is factor in your WHOLE financial profile when determining how much house you can afford. Please be completely honest with your lender or mortgage broker about your finances. At the end of the day, YOU are the one repaying your loan, and you don’t want to struggle with a bill you can’t afford.
As I’ve said before, do you homework. There are many great mortgage calculators online so take advantage of those and remember, research is your best ally!