Getting ready to buy a house is an exciting process. There is plenty for homebuyers to consider, and establishing a budget for how much house you can afford is one of the most important.
To help, there are many online calculators to help homebuyers determine what type of budget they should be establishing for their home search. But, while these tools are helpful, only the homebuyers really know what their true monthly budget looks like.
Lenders approve homeowners based on their income and debt. They are not able to account for how a buyer spends their money and what type of lifestyle they live.
If you are getting ready to buy a house sit down and go over your budget to decide what type of monthly payment you can comfortably afford. When doing so, don’t forget to add in these 4 commonly overlooked expenses.
This is a category that includes the extra spending you do that is essential. They are things that are nonnegotiable to you. This list includes costs like charitable giving, health care, daycare, or caring for aging parents.
Many people stopped saving for retirement during the recession, which means there is a lot of catching up to do now that the economy has turned around. This can be easily overlooked when thinking about monthly spending.
However, you need to take it into consideration when you are deciding how much you can afford to spend on a monthly mortgage.
This category includes all of the extras you do that help you enjoy your life. They are the experiences and events that enrich your life. It includes things like vacations, conferences, gym memberships and therapists.
These activities can be considered optional, but they do have an impact on your life. If you are deciding to eliminate some or all of these activities from your budget to afford a mortgage make sure you understand the full trade off that you are making.
If you are a parent you know that kids are expensive. Not long after you stop paying for diapers you start paying for all kinds of other things. Some of these extra expenses include sports equipment, music lessons, summer camp, and college savings.
Most parents are unwilling to cut out these expenses because they want to provide their children with lots of opportunities as they grow. If you have children or plan on having children, carefully consider how much of your monthly budget you want to reserve for this category.
Establishing a budget for your house is not always an easy process for homebuyers. No homeowner wants to find themselves “house poor” (when you cannot afford any extras in life because all of the extra finances are going to the house) after they purchase a house.
Remember that the amount a lender approves you for does not necessarily mean that is the amount that you can comfortably afford to pay during the month. It is always better for homebuyers to come in under budget than to stress every month trying to make ends meet.