Buying a home is a huge responsibility, and you do not want to be late on your mortgage payment. A late or non-payment has terrible consequences down the road. Before you even think about speaking with a broker, it’s a good idea to assess your own finances and figure out your price range. Figuring out how much home you can afford is the most responsible thing you can do when you’re trying to buy a new home.
Determine Your Fixed Costs
The entire process begins with an honest breakdown of your fixed costs. This is not the time to start cutting, that comes later. Start with a spreadsheet where you list every monthly bill you have that cannot be canceled. Then list your current rent and list your monthly income too. This helps you see how much money you could potentially have left over, which is a good indication of how much your rent can stand to increase.
Plan to Save
You should start plugging in numbers using calculators online if you can, but it’s very hard to estimate taxes and insurance costs in addition to mortgage payments. All you need is a rough figure to try and gauge how much money you will have left over. Saving is crucial. If you don’t save, you can’t make repair or take trips. Saving also serves a practical benefit: more money in the pocket means more money to invest.
The improvements you make on your home should always have a return on investment, so be sure that you carefully consider any change you make and weigh the pros with the cons.