How first-time homebuyers can overextend themselves.
Buying a house is an exciting event. Especially when it’s your first one. While you might not see the fall as a good time to buy a home, there are advantages. However, no matter what time of year you buy a home, don’t overestimate how much house you can afford.
Mortgage Rule of Thumb
Though there is some wiggle room, most experts say that you should keep mortgage payments to under 28 percent of your gross income. That number can help prevent you from buying more home than you can afford. Essentially, keeping your percentage low frees up money for other areas. Owning a nice, big home is cool. But it’s not so great if mortgage payments chew up all of your income each month.
Keep Spending in Check
This seems like a fairly obvious idea: Don’t spend too much on a house because you won’t have any money left over. However, first-time home buyers are surpassing that number. By a lot. The average first-time home buyer is spending about 40 percent of their gross income on mortgage payments. There are two main reasons why this is happening. One, mortgage rates are quite high, and home prices are also increasing. When shopping for a home, it’s important to avoid stretching yourself too thin. A nice home is great, but only if you can afford it.
Do One Thing: Use a mortgage calculator to ensure that you can comfortably afford the home you’re considering.
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