The bigger the better, right? We dream about our castle having an indoor swimming pool, a three car garage and a fully stocked wine cellar.
The reality for most of us is something much more modest and there’s nothing wrong with that. Why have the castle if you’re worried about next month’s mortgage payment? All the space in the world won’t allow you to hide from your monthly financial commitments.
It’s easy to bite off a bigger home than planned. You have a price limit when shopping for a home, but the house you saw two nights ago with your realtor is just slightly over your budget. The one you saw last night is just slightly more expensive then the last house. And on it goes.
Thankfully, financial institutions have checks in place to measure how much of your income is being spent on such things as credit cards, car payments, utilities and mortgage payments. That formula will tell you how much of a house you can afford. But what it doesn’t consider is future maintenance costs, unforeseen expenses and your lifestyle.
Ask yourself, if you buy to your limit are you prepared if something goes wrong with your home? Do you have the financial resources to replace the roof in two years? How about if the bathtub overflows and ruins your finished basement? And what about that trip to Europe or Mexico you like taking every year? You don’t want to be mortgage poor. You want life balance.
When buying a home, it’s not as simple as saying you can afford it then everything is great. Financial Institutions will tell you how expensive the house can be but only you can decide if it’s the best for you.
If you decide your dream home is not in your budget now, then look at something smaller. Maybe you can use the equity you build up in that home to put towards a bigger home down the road. Plan to make your dreams come true – and at Dominion Lending Centres, we can help.
Having the home of your dreams is great, but so is enjoying your life. There will always be a castle out there waiting for you!
Courtesy of Kevin Babin, AMP – DLC Canadian National