CAN YOU AFFORD NOT TO OWN?
That is what you should be asking yourself. Every month that goes by you are wasting your hard earned money on someone else's mortgage. The cost of rent has been on a steady rise as well. What do you plan on doing if rent increases faster than your salary does? Owning will give you set principal and interest payments and every time you make a mortgage payment, you're one step closer to not having to make any more. You can't say that about rent.
WHAT PAYMENT CAN I AFFORD?
At You Can Own, we don't prequalify you with a maximum home price. We will be able to tell you exactly what payment range you will qualify for. This is important because a variety of things can effect your payment other than the overall price and the payment is what you should be budgeting for.
A SIMPLE TRUTH
A mortgage company is not going to want to lend you more money than you can afford to pay back. This means that you shouldn't even be able to purchase a home you cannot afford. To ensure this, the lender is going to take your gross monthly income and divide it approximately in half. The actual percentage depends on the loan program. It's assumed that roughly half of your income will be used for things like food, entertainment, gas, etc... What remains is reserved for your mortgage, car payment and any other debt that appears on your credit report. It's that simple.
HOW DO I KNOW WHAT I SHOULD BUDGET?
Another thing to consider is the money you can save by owning. Sometimes people opt for payments well above what they used to spend on rent. Despite the larger expense, they may end up spending just as little as they did before when other things are considered. Below are a few examples of savings through ownership.
- Tax write off for interest expenses
- Energy efficiency savings
- No longer effected by inevitable rent increases
- Vehicles protected from the elements