How much house can you afford? 5 questions to ask yourself.
Not getting in over your head with a housing payment should be a concern whether you are renting or buying a house. A mortgage lender may tell you what you are qualified for, but you also need to consider what you know you can afford. Getting the most expensive house you qualify for may not be a good idea. Ask yourself these questions as you plan for your housing.
- Is your current housing payment difficult for your budget? If you are currently struggling to make your rent or mortgage payment, obligating yourself to a higher amount can be a recipe for disaster. If you do not currently have a savings and a surplus in your monthly budget, you are already spending all the money you have in your budget.
- Will you need other loans soon? If you currently have two cars that are ten years old, with no loan, that may change soon. If you are going to need car loans, or other loans, factor those in BEFORE you max out on your housing.
- Is your income stable? You should consider the likelihood of your income continuing at the same level. Overtime, bonuses, commissions and even your job may not be there in the future. You should plan your budget based only upon income that is reasonably expected to continue.
- Is somebody else telling you that you can’t afford or qualify for a certain amount? If you are applying for a mortgage or a rental unit, as part of that qualification process there are usually affordability ratios used. Ask them to explain why it is that you are not meeting those affordability ratios.
- What other budget shocks should you anticipate? We have many expenses that are not debts. Those can include things like child care, cell phone service, education costs, and almost anything else. Be sure your budget plans for life changes that will cost you money. You should also have a plan for surprise expenses. What will you do if you need a furnace, a roof, or a major car repair? Surprise expenses can be majorly stressful. They are going to happen. Plan for them.
Planning for your housing is very impactful to your life and to your lifestyle. It is understandable to want more; who doesn’t? You can make gradual improvements to your lifestyle with careful planning for your budget. Remember to plan not only for today and tomorrow, but months and even years into the future. Your future is bright!
This article was originally published by at https://www.thekeytorentals.com/
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