How Much Do We Spend On Our First House?
Home ownership, for most of us, is the biggest purchase and commitment we take. A big question that arises is how much do we spend?
You’ve lined up a realtor, found a neighborhood that meets your needs and is a great commute to the office, your down payment funds are accumulating, a mortgage pre approval is in place and you know how much mortgage you qualify for. So how much do you spend? Well, there are a few factors to consider.
Your mortgage pre approval numbers are based on credit, down payment and employment, all numbers inputted into formulas which determine lending ratios and your mortgage amount. Keep in mind that these numbers are calculated at the time of your pre approval. If you’re planning to purchase a new car, furniture, some toys or welcome a new one into your family, these additional expenses must be taken into consideration.
Change is the only constant.
We have seen very clearly how quickly the economy can change. Over the past months people have had to sell new vehicles, toys and down size or sell their homes to keep above water, managing payments. If overtime and bonuses were used in your pre approval and they have been reduced or eliminated totally you may find yourself in a tight spot.
When considering how much you want to pay for your new home it’s good to have a plan in place – just in case. If you are working now and have good income then you may consider taking advantage of prepayment options to help reduce your mortgage in preparation for some of the other stuff. (vehicles, toys, children, retirement)
How much can you afford, really!
You don’t want to start off home ownership being house poor and then get hit with unexpected surprises. We all have to live a little and having a roof over our heads is only one factor in the equation of life. It’s good practice to review your goals when you ask the question, how much do we spend on our new house?
On the other hand if you find your dream home and are determined and able to make allowances for a period then go for it!
Either way keep in mind there are closing costs, that you will incur with securing a home, that also need to be factored in to your purchase. A few of these may include legal fees, appraisal fees, home inspection and don’t forget moving expenses.
We’re here to help! If you have ideas or questions we can help fill in the blanks, provide you with numbers and advice. Ultimately, you’ll have to sit down do some brain storming and number crunching to determine how much you are comfortable spending on your new home. You may find these steps easier to walk through before you find the perfect house.