Setting Your Home Buying Budget
I recently read an article that stated almost 25% of people are paying more than half of their income for housing. They may not have started out with those ratios, but over time, as their expenses increased and salaries didn’t keep pace, that’s where they ended up.
When setting your home buying budget, our advice is always to first meet with a local lender and determine how much you are qualified to borrow. But the process doesn’t stop there. What you are qualified for and what you feel comfortable spending may likely be two different numbers.
If you stretch yourself to the limits of your budget when buying a home, you may not be prepared for:
- A job loss or other reduction in salary
- A medical emergency
- Increases in taxes or insurance costs
- Unexpected home repairs
There’s more than just emergencies to worry about. Buying at the very top of your budget might also mean changing your social life to adjust to the addition of a house payment to your expenses.
We are the first ones to say that owning a home is a wonderful thing. But don’t buy a house that is so expensive that you no longer can afford to enjoy a night on the town with your friends or dinner out with the family.
Carefully consider all of the aspects of home buying, not just the idea that it will be yours.
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