Just Because You’re Approved Doesn’t Mean You Should Max Out Your Budget
When purchasing a home, it’s easy to get excited when your lender approves you for a high amount. But life goes on beyond the house! While you might be approved for a certain budget, that doesn’t mean you should max out. Here’s why:
Consider Your Lifestyle Beyond the Mortgage
Your monthly payment is not all that goes into the equation. Consider your lifestyle: hobbies, nights out, vacations, or just the random things that come along with kids. A larger mortgage can cut into the freedom for those things you like. You want to be sure your home fits your life-not that your life is dictated by your home.
The 28% Rule: A Good Guideline
A great barometer of what you can comfortably afford is by adhering to the “28% Rule.” This rule suggests your total housing expenses-mortgage, property taxes, homeowner’s insurance, and any HOA fees-shouldn’t exceed 28% of your gross monthly income. In addition to that, be sure to budget in utilities like electricity, water, gas, etc., to make your stay in the home comfortable.
Leave Room for the Unexpected
Life is full of surprises, and so will be your home. Maintenance and repairs-from roof leaks to broken appliances-will pop up. You may have to plan for life events such as a growing family or career changes that require you to move. Choosing a mortgage that leaves room in your budget helps you handle these kinds of surprises without financial stress.
Your Financial Flexibility Matters
Ultimately, it’s about your financial comfort and flexibility. Spending the maximum amount of your budget may indeed buy you a bigger house, but it will also perhaps shut the doors to enjoying the kind of lifestyle you dream of. Because you are considering all factors that impact your budget-beyond just your home-you will make one that is much more sustainable and enjoyable for the long run.
And remember, this is your budget-so have fun and make sure you buy not just a house, but create a home and life you love without sacrificing financial peace of mind.