Buying a Home Comfortably and Affordably

    Buying a Home Comfortably and Affordably

    Feb 22, 2019

    One of the biggest considerations financially when buying a home is what you can afford. Before you fall in love with a home, it is important to take the time to put a budget together. If you've been prequalified for a mortgage loan amount, a budget will help you figure out what monthly payment you will be comfortable with and will fit your lifestyle

    Setting a budget:

    1. Know your income & expenses- add up all of your monthly expenses and deduct that from your income.
    2. Set your priorities- separating your expenses into a "need" and a "like to have" category will help you see where you can adjust your spending
    3. Track your spending- steps 1 and 2 won't mean anything if you don't continue to track your spending and know where your money is going every month.

    A good benchmark is to spend no more than 36% of your gross monthly income on your total debt. Debts include everything from a mortgage payment, car payments, utilities, student loans, etc. It can be quite shocking to see how much money we spend every month and what we spend it on. Writing everything down can certainly help to make some adjustments whether you're looking to purchase a home or not.

    A mortgage payment consists of five things: principal, interest, taxes & insurance and the fifth being private mortgage insurance or PMI depending on how much your down payment is.

    P.I.T.I.

    Principal: This is the amount you are borrowing

    Interest: The amount you pay the bank for loaning you the money

    Taxes: Yearly property tax assessment (depending on which state you live in, the property taxes can be increased a certain percentage every single year. For Oregon, it is a maximum of 3%).

    Insurance: Homeowners insurance for life's unexpected emergencies

    PMI(Private Mortgage Insurance): If you are putting less than 20% down you will be paying PMI