Can I manage mortgage payments into my lifestyle?
Ready to pull the trigger and buy yourself a Home? As you contemplate what kind of property you would like to purchase, you will have to consider the first crucial step of buying anything which is obviously money and how much money will need to be put into your mortgage.
What does to take to buy a Home in the first place?
Consider how much you spend a month on your necessities/wants versus how much you have put away in your savings accounts or investments.
If your spending is higher than your saving, you will need to take action and rebuild a budget that allows you to free up some cash for the upfront costs a Home puts into your life.
The upfront costs you will have to pay for include (but are not limited to):
- A down payment
- Mortgage insurance (if required)
- Home inspection
- Appraisal fees
- Registration fees
- Legal fees
- Moving costs
- Renovations/repairs (if required)
This list is only an introduction into the future costs involved with being a Homeowner. Is it scary? Of course. However, we want to make sure that you are 100% committed to putting the time, effort and money into your future Home.
After figuring out whether or not you can contribute these first costs, you will have to see how much you are willing to spend on your mortgage per month.
The Rule of Thumb
It has been repeatedly said throughout the real estate and mortgage industry that a mortgage should take up no more than 28% of a monthly income.
Take this equation and fill it in your personal income:
Monthly income X 28 / 100.
The answer you will get is your monthly income.
Here's a situation:
If you earn around $45,000 a year, you are roughly pulling in $3,750 a month. After applying the rule of thumb, you will have a maximum amount of $1,050 to spend on a mortgage.
The 28% represents the amount you should be spending at max. Anything less or more can be deteriorating to your other monthly expenses.
Are you ready to add mortgage payments into your life?
It's a good thing to note that your debt-to-income ratio cannot exceed 35%. If this is the case, you will need to pay off existing debts, consider adding in another source of income or in general, spend less & save more.
To estimate monthly mortgage payments, please visit our mortgage calculator for more detailed information. Our calculator is for research/informational purposes only.
Still not finding the answers you're looking for? Don't be afraid to contact us. We are here to assist you in becoming a responsible Homeowner!