Thursday, June 18, 2009

How to know you can afford owning a house

I was reading something online the other day that gave a great way to figure out if you can own a home.

First, you figure out all the stuff that you'll have to pay for each month - mortgage, homeowners insurance, utilities, property tax (this way you don't have to come up with it all at the end of the year some how), home repairs, etc. Then you figure out how much you are paying to rent - rent price, utilities, etc.

Now that the numbers are figured out here is what you do:

Let's say that renting costs a total of $900 a month and owning a home would cost a total of $1500 a month.

Each month, on the first day of the month (no exceptions) you put $600 (the difference between renting and owning) into a savings account. After a few months if you are feeling stressed for money or having a hard time getting that $600 into the account on the first of the month, then chances are you'll have the same problems when you're owning your home. However, if you're making your monthly payment with ease then you're probably good to go.

Anyway, I thought this idea was brilliant - a little obvious now that I've read it - but absolutely brilliant, so I had to share with you.


christy said...

Homes will have repairs that you will have to pay for so you still have to have money left for those too

kelsey said...

Yes, brilliant and applicable to other purchases as well. Thank you.