Homeownership is a beautiful thing. You can decorate as you like, build equity in your name and live that dream of knowing that you worked hard and earned something big! But a lot of us ‘overbuy’ and overextend ourselves thinking we can adjust other expenses to make it work. And that can lead to disaster. You can learn a lot about Homeownership from Genworth.
Technically, a house payment – including insurance and other loan fees – should not run you more than 25% of your net income. I know that may seem low but it is realistic. This percentage includes escrow amounts and any other loan fees that you may incur on a monthly basis. When checking out the best places to raise your kids make sure it is in an area that you can afford so you can stay there!
Now, how do you come up with an honest assessment of your income versus expenses to create that magic number that buys you the American Dream? Use a reliable Mortgage Calculator and be as honest as you can. I was shocked to see what number came up as compared to what I thought I could afford!
Secondly, if the amount that is calculated is too low for you, try being realistic about what you can cut from your budget to afford the house you want. Call your creditors and ask for rate reductions. Call your insurance company and see if adding a house to your bill will reduce your car insurance. Check your utilities. Are you willing to give up that premium cable package in order to own your own home? And work with your mortgage company to see if you can get a reduced rate for auto drafts from your account or paying bi-monthly.
There are a lot of ways you can get into a house that you love. But staying at the 25% percentage on your mortgage payment can help insure that you can afford any repairs, maintenance and unexpected costs associated with home ownership.