A Mortgage That Works For You

Just because you can doesn’t mean you should. It’s a lesson that applies to so many things—including buying a home. Just because you’re approved for a certain loan amount, that doesn’t mean you should spend that much on a home.

Choosing the right mortgage for you is a crucial step in the home-buying process. Understanding how the home you buy affects your mortgage payments and keeping them within your budget will help you avoid financial stress.

Why is it so tempting to buy a more expensive house?

In American culture, we’re told that more expensive houses indicate success. We are programmed to believe that the things we buy must function well and, at the same time, reflect our values and personality.

Cultural norms aside, let’s not discount the emotional pull of homeownership. A house will likely be the largest purchase of your life, and it will be where you will spend most of your time. The place you call home will be your place of refuge from a world of work and stress. It may become a place where you will start and/or raise a family one day. The decision is not an easy one, and it’s not one to take lightly.  Of course, it’s important to love the house you’ll call home, but that doesn’t necessarily mean you need to spend more money. Think about the amount you’d be spending, why you’d be spending it, and ask yourself if that would be the best decision for you.

Less is More

Besides not knowing what the future holds, buying under your budget will give you some breathing room for things like savings, investments, and other expenses. The lower your monthly housing payment, the more money you’ll have available for things like rainy day savings, funding retirement accounts, business opportunities, other investments (maybe rental real estate), and/or renovating your house. It’s also important to consider your stage of life and what makes the most sense for you. Cost is a major part of that, but you may also not need the responsibility of extra bedrooms you won’t use or a yard you don’t have the time to maintain.

Here are a few questions to ask yourself while figuring out how much house you can comfortably afford:

• How much money do you really have to work with each month?
• What type of safety net (savings, family support, etc.) do you have if something goes wrong?
• How much outstanding debt do you have currently? (Credit cards, student loans, etc.)
• Are you willing to change your lifestyle—spending less and saving more—to get the house you want? 
• How stable is your income? Do you have a steady paycheck, or are you self-employed with variable income?
• What are the costs associated with moving? Don’t forget to include the moving van, new appliances, hotel expenses, gas, and meals out during the transition period. 

Not sure where to start when it comes to your home budget? Our team of mortgage experts is here to help. Contact our team or start your application now.