The fantasies of owning the perfect dream home all too often cloud one’s judgment in purchasing this home, leaving home-buyers scrambling for quick loans without even considering, “What mortgage can I afford?” That question is the most important one a buyer can ask as he or she determines what mortgage to agree to.
Do not rush into loan agreements and forget to consider “what mortgage can I afford?” The last thing anyone needs is to agree to make a payment every month that he or she cannot afford and becoming stuck in a cycle of debt and struggle. Carelessly agreeing to a mortgage when you do not know what you can really afford can easily put you in this situation.
How Do I Know What I Can Afford?
Luckily, you don’t have to be an accounting major or even like math to be able to determine what mortgage is right for you. Mortgage calculators are great tools that show you what factors of your life influence your mortgage options and what you will be able to afford. Make sure, however, that the calculator you use is from a reputable source.
In addition to calculators, you may even want to consult a financial advisor whose job it is to tell you exactly what you can and can’t afford. Armed with this knowledge, you will be able to avoid trapping yourself in the wrong agreement.
Numerous factors determine what it is you can and can’t afford. To understand what you can afford, you’ll need to know exactly where your money is going. Banks profit off their services through interest, so you should know how much interest you are paying as well as if and when the rate changes. Understand the down payment.
A larger down payment demonstrates safety and capability, so the larger your payment, the better the loan offer you will receive. Similarly, don’t forget to take property taxes into account. You will be paying all of these expenses at some point or another; know when and where your money is going. Don’t trap yourself into a mortgage that is too high for you. Ask yourself, “What mortgage can I afford?” and use that as you find the right way to pay for and keep your dream home.