FOLLOWING A BUDGET

So you have been pre qualified through a reputable lender for $250,000. That’s easy enough. Now it is time to go out and find a house for $250,000 and place an offer on the house.

Maybe Not! It is wise to review your budget before making any decisions on how much to spend on a house. Sometimes just because the lender says you can afford a payment, it doesn’t mean you really feel comfortable with that payment. Lender’s qualifications are based on specific amounts that will allow you to pay for utilities, groceries, auto insurance, gasoline and other essential items. They also take into consideration that a family will spend a certain amount of money for extras, such as eating dinner out, taking vacations, paying for your children’s gymnastics, karate or other things. Unfortunately, they use an amount that is straight across the board.

Here are some things you may want to consider when deciding whether or not to spend the full amount you qualify for:

1. Do you commute to work and therefore use more gasoline than other families?

2. Do you have jobs that are odd hours which makes life easier if you eat out more than once a week?

3. Do your children do more than normal extra curricular activities?

4. Do you own an RV or a boat and like to spend weekends playing at the lake?

5. Do you give charitable gifts that are over and above the national standard?

6. Do you have a child or children in college that is not funded through other means?

7. Do you eat healthy and organic foods only that may cost more than the normal amount a family spends on groceries? (By the way, good for you if you do!)

8. Do you have commitments to care for elderly parents in your monthly expenses?

9. Are you looking in a gated community that has Homeowners Fees?

All of these items and more can affect your ability to repay a mortgage. They are things you should consider before making a final decision on your purchase price.

Then the next thing is to set your price and stick to it. It is so easy to say “If I just raised my price by $25,000 I could get so much more.” It is a trap that many fall prey to during their search. The problem is that could raise your payment by as much as $200 a month depending on your interest rate. If you decide to do that you MUST look at your budget and determine which of your “extras” you can give up. Don’t let someone else talk you into spending what you are not comfortable with spending. Not a lender, not a family member and definitely not your REALTOR®.

The last thing I want to say about this process is a quote I have heard many times.

“You don’t want your house to OWN you; You want to own your house”.

Happy House Hunting!

CalBRE Lic. --- Jack Williams #00419592 --- Diana Williams #00986318 --- Laura Lynne Wyatt #01443357