Own Your Home

Many of us have heard the saying “Own your house, don’t let the house own you." It’s a quick little snippet that can have profound meaning. It traditionally comes into play when we are looking at buying a house. When you ask your lender “How much can I afford?” or “How much do I qualify for?” you will receive a number that is easily computed. But is it the whole story? And is it the best number for you?

 

It is not the whole story. The number you are typically given is just a snapshot in time. It reflects your debt payments, income, and the new mortgage payment as of right then. Do you plan to borrow money for new furniture, remodeling, building a garage or fence? Maybe you will need to replace the old paid-off car and end up with a new car payment. Perhaps you have inklings of your income falling because of reduced hours, quitting your second job, or retiring.

 

Your lender will hopefully have a conversation with you about your financial future but many times this does not happen. Lenders have a financial incentive to get you into the most expensive house the numbers allow. The bigger the loan the more they make. It is up to you to look out for your best interests.

 

Your best number is the one that fits not only your current budget but also your budget over the next couple of years. Believe it or not, most likely, your lender will not include childcare expenses or a retirement account loan payment into your calculations. Each of these monthly obligations can be large and can make a significant difference in your budget. Your best number should reflect everything about you. You should take a holistic and realistic approach to what you are about to step into.

 

It’s exciting to hear you qualify for a $400,000 house but if the monthly payment becomes a struggle, it will soon become a regret. Buy what you feel you can afford not what the lender tells you. You hold the reins, and you know what is best for you.

 

Moris Bries
Director of Real Estate Lending