First time home buying tips often suggest calculating your total budget before looking for a home. Why does this matter? For one thing, knowing how much you can spend saves time. Also, it’s easier to make smart financial decisions before your heart gets involved. After you’ve fallen in love with a home, it can be really hard to tell yourself no, even if you can’t really afford it. This happens to everyone, not just first-time buyers.
How To Calculate Your Purchasing Budget for a Home
There are a few things you should factor into your total budget:
- Your pre-approved mortgage amount
- Your monthly income
- How much you feel comfortable paying each month for a mortgage
- How much money you have in savings for a down payment
- Your current lifestyle
Your personality plays a large part in this calculation. For example, some people are willing to cut back on other expenses for a while to afford their dream home. Others want to limit debt as much as possible and minimize stress.
