Can you really afford that new mortgage? When you’ve finally completed your property search and singled out one or two good prospects, you should examine both your current finances and any potential life changes that may crop up. Surprises aren’t always pleasant and can end up being costly enough to impact your ability to pay your mortgage. Financial expert Dave Ramsey recommends that you get a mortgage that is no more than 25 percent of your take-home income to make sure you can afford the payments and still be able to manage any problems that can crop up.
When you look at new homes, you should also consider your lifestyle and career. Will you have to relocate within a short period of time? Trying to resell a home only a year or two after buying it can cost you big in our current economy. Don’t forget to consider your family size. No matter how many kids you currently have, will you still have room if you have another? How about if Grandma needs to move in? A changing family size can alter how you feel about your home and how well it suits you. Consider these questions and others like them when you make the decision to move.
Some of the things that impact the affordability of your mortgage have nothing to do with your home at all. Is your job secure or are there other opportunities in your local region if your company closes? Job loss, illness and injury can all impact your income and your ability to pay your mortgage. Make sure you leave enough of a financial cushion; you’ll be much less damaged when life happens.