Before you take the leap to buy a house, make sure you carefully think through how much home you can comfortably afford. The key word here is “comfortably”. Having a mortgage that weighs you down every month is never a good situation.
The first step (if you haven’t done so already) is to create a budget. This will help you to determine where a mortgage payment will realistically fit in. Instead of focusing on how much money the bank will let you borrow, determine how big a mortgage you can comfortably take on without putting any other financial plans on hold.
A good rule of thumb is to start with whatever you make each month (before taxes), and multiply that by 28%. This will likely provide you with a manageable monthly mortgage figure. (Look for online tools that can help make this calculation easier for you.)
Once you’ve determined what you can realistically afford, try the payment on for size by starting with what you’re already paying for rent, and setting aside any additional money you’d need to make the mortgage payment (factoring in principal, interest, taxes, insurance, and additional costs). If, after a few months, this still feels like a comfortable payment, you’ll have a better idea of what you’re in for once you do buy your home.
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