How can I figure out how much of house payment fits into my
budget? That is a common question that many people want answered. When it comes
to buying a house, it is very important to make sure that you don’t strain when
making your monthly payments. You need to do your calculation well to ensure that
your monthly house payment fits into your budget. But the big question is; how
can you do that? In this article, we are going to answer that question by
telling you the factors that you need to consider.
1. Add all your income
In order to know how much you can comfortably afford to make
your monthly house payment, the first thing that you need to do is to add all your
income to know exactly the amount of money that you earn each month. It is very
difficult to come up with a budget if you don’t know how much you can spend.
2. List down all your expenses
Once you add every source of income that you receive each month,
the next crucial step is to list all your monthly expenses. You need to know
how much you spend on rent, food, clothing, utilities, transportation, recreation,
medical, personal among another things. Knowing how much you spend on expenses is
vital because it will help you know how much money you will remain with.
3. Calculate the cost of home ownership
Once you know the exact amount that remains after you have
deducted all your expenses, the next important step is to calculate the cost of
home ownership. If you cannot pay cash for your home, it is recommended that
you ensure that you keep your mortgage payment including home insurance and property
taxes to not more that 25% of the amount that you earn each month. If you
exceed that amount then you will strain yourself and you may end up delay making
your monthly payments at some point.
4. Consider future expenses
This is a very important factor that many people usually
overlook. When figuring out how much of house payment fit into your budget, you
also need to consider future budget that will increase your expenses. For
instance, if you are still single, you must put into consideration the fact
that you will get married at some point and get children. This will increase
your expenses. Or at some point you may want to update the look of your homes hardwood floor refinishing birmingham al. Ensure that you accommodate future expenses into you budget to avoid struggling to make house payment in future.
5. Consider your lifestyle
This is also a very important factor that many people don’t
play close attention to. It is crucial to
consider how your personal lifestyle affects your ability to make monthly payment.
Lifestyle choices that you make will affect your ability to make your monthly
house payment. For instance, if you decide to take your child to a private school,
that is an added expense that can affect your ability to make your payment. Also depending on the space in your new home you may have to look at self storage.
In conclusion, if you want to know how a house payment fits
into you budgets, it is very important to know your monthly income, your total monthly
expenses, future expenses and your lifestyle.