How Much Home Can You Afford
Ever heard the phrase “house poor”? It refers to the act of buying too much house for one’s budget, and then being broke all the time as a result.
A lot of San Diego home buyers find themselves house poor because they bite off more than they can chew — in a mortgage sense. If you overestimate your ability to pay a certain amount each month on a mortgage, you will undercut your ability to spend money on other quality-of-life items.
Nobody wants that. So be sure you’re not over-investing in San Diego real estate.
What Can You Afford?
Before you begin your San Diego house-hunting process, find out how much of a mortgage loan you can afford to take on. You should be able to “comfortably” pay your mortgage each month, while still having money left over for living expenses, savings, and quality-of-life niceties.
To determine your financial comfort-zone, you need three things: a budget, a price on a San Diego home, and an online mortgage calculator. If you don’t have an actual sale price of a home, just start with the cost of a house you would be interested in buying … something you think is within your budget.
Now enter the home price into the mortgage calculator using current interest rates and a 30-year mortgage (for hypothetical purposes). Once you’ve obtained an approximate monthly payment for various mortgage sizes, you can more accurately figure the price ranges into your budget.
Remember, if you over-invest in San Diego real estate, you will face to undercut other expenditures. You will have to scale back on your car payment, spend less on groceries, or avoid the fun stuff in life like movies and dining. In other words, if you spend too much on your San Diego home, you may find yourself house poor.