Affordable Housing?

Recently I was reading a blog posting on "Comparing Home Costs by City" from one of my favorite Canadian women bloggers Fabulously Broke in the City and it occurred to me that one of the common mistakes that people make is getting in over their heads with a large mortgage, because they may perceive the home purchase cost as cheaper in comparison to others in their city. 

DO NOT get caught up in the real estate web if you haven't done your homework first!  The biggest mistake that most home buyers make, is basing a purchase decision on the market conditions and not on their own personal situation.

By your personal situation I mean that if you are making $30,000/year and are expecting a raise soon, don't count on the raise until you see it.  Also, consider any updates or immediate repairs you may want/need to do on the property you are buying...where will that $$ come from?  Another thought is kids...are you wanting to have them in the next 5 years OR are they teens headed for university soon and are you thinking about helping out with tuition?

As a Mortgage Broker, I generally always ask the client if the rent or mortgage payments that they make monthly are working for them, or could they foreseeably budget more without it turning into a large sacrifice.  You see, you may be "pre-approved" for a certain $$ figure mortgage based on your annual income, but if you don't check the monthly mortgage payment cost, you may setting yourself up for disaster!  ALWAYS check to see what mortgage payments are on a pre-approval BEFORE going house hunting and committing to a purchase on a property, only to find out that the payment may be more than double what your current rent payment is now.  YIKES!

There is nothing worse than the reality that you are house poor, and strapped into a mortgage that is for a 3 or 5 year term (so there is usually a penalty involved to get out of it before the term expires).

Think about what your lifestyle right now is like...consider where you spend most of your $$, and then ponder the thought of if things were to change with your income or spending habits, could you still manage?  Only you know the answer to this question.

 Liz