How much home can I afford?

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First, I have a confession to make.  I really wanted to title this post, “How Much Home Can I Afford, or Why Lady Cora’s Fortune Must Be Tied To The Estate.”  It’s true that I’m among the 57 gazillion people who are obsessed with Downton Abbey, and I honestly can think of no better example of being house poor than poor Lord Grantham.  In an early episode of the first season, he explained this to his eldest daughter, Lady Mary.  “If I could take Mama’s money out of the estate, Downton would have to be sold to pay for it. Is that what you want? To see Matthew a landless peer with a title but no means to pay for it?”  Now, I won’t drag you through the love/hate relationship of of Matthew and Lady Mary, but suffice it to say, no, she’d never want to see the man she is too proud to admit she loves left penniless.

Which brings us back to the question at hand — how much home can I afford?  At first the answer might seem easy to find.  The web is scattered with mortgage calculators and qualifiers that boil it down to a quick calculation of your income versus your debts. With about 15 minutes of effort, a lender can give you pre-qualification amount.   And sure, that’s a great place to start.

I’d challenge you to take things a step further.

If you really want see how the price of a home will affect your overall financial picture, consider your lifestyle.  Spend some time thinking about your daily activities in relation to your finances.  Do you spend most of every paycheck, or are you socking away some savings?  Of the money you spend, where does it go?  Tracking your spending for a few months, or looking back at your bank and credit card statements is a great way to figure this out.  For us it’s restaurants and travel — mostly tacos and Vegas.  Consider how an increase or decrease in your monthly mortgage payment, including taxes and insurance, will affect your flexible income.   Lower monthly mortgage = more tacos and Vegas trips!

Once you get all that sorted out, decide what you can and can’t live without.  If I couldn’t have tacos once a week and go to Vegas once a year, I’m not sure life would be worth living!  For you, maybe it’s weekly frozen yogurt, monthly pedicures, lots of live music, or keeping that kegerator in your man-cave full of PBR.  Whatever it is, planning for it now will pay off well into the future.  Owning a home should make your life happier, not harder.

I think it’s worth repeating — Owning a home should make your life happier, not harder.  So take charge of your home buying process and decide for yourself what you can and can’t afford.  Lenders are here to tell you what loan amount you’ll likely get approved for, not what’s best for your life.  That part is up to you.

When you’re ready to start the process, let me know.  I have a great network of lenders — smart, honest folks who will have your best interest at heart!

Related Blog Post:  Financing 101:  Choose a Lender and Get Pre-Qualified

www.ktaustinhomes.com

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2 thoughts on “How much home can I afford?

  1. Pingback: Financing 101: Choose a Lender & Get Pre-Qualified | Kimberly Tortorice, Austin Area Realtor

  2. Pingback: Financing 101: Choose a Lender and Get Pre-Qualified | Kimberly Tortorice, Austin Area Realtor

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