With how the market is going right now, you may be tempted to max out your budget for the sake of buying the home you love. But buying more than you can actually afford may not be the best idea in the long run. Here are a few things to consider before you bite off more than you can chew.
Plan for Unexpected Expenses
You may not want to max out your budget simply because you don’t know what you may be faced with down the road. You may encounter unexpected medical expenses, car troubles, or even decide to make a career change that dramatically affects your salary. You want to make sure you have enough wiggle room to meet the demands of life.
Track Expected Expenses
As a homeowner, you’re not only responsible for your mortgage. You’ll need to anticipate covering insurance, utilities, and regular home maintenance and repairs. Try to estimate some of these common expenses before you commit to a large payment.
Follow the Rise in Inflation
These days, it seems like everything is going up — gas, groceries, child care, etc. While inflation can be unpredictable, it’s wise to keep an eye on the current economy so you can budget appropriately.
Stick to the 28% Rule
Follow the 28% rule to play it safe. Most responsible lenders should advise you to not spend more than 28% of your gross monthly income. It’s also a good idea to make sure your household debt doesn’t go over 36% of your gross monthly income. Keeping things under these two numbers will put you in a comfortable spot for purchasing.
While the competitor in you may be tempted to buy at the top of your budget for that home you just have to have, it could result in disaster later on. We encourage you to be smart about your purchase and always consult with a trusted real estate agent. Connect with one of 9,000 agents today to help you successfully navigate the market. To find out what you can afford, check out our mortgage calculator to help estimate your monthly payments. Download the REIN.com app and put the power of fresh and accurate listing data in the palm of your hand. It’s available free in the Apple App Store and Google Play Store. For local listings you can trust, start with REIN.com.
