Can You Afford This House? An Experiment

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When looking for a new home we get carried away looking at the amount of space, the architecture, the fixtures and other details, the landscaping, and the list goes on. We pay so much attention to the looks of the house that we forget to look at what we will actually pay for the house. Yes, we look at the actual cost of the house, but we rarely convert that into what the reality of that particular mortgage payment would be.

If you are looking at a particular house, or a particular price range of homes, try this experiment to see if you can realistically handle the mortgage for that price house:

Go to http://www.zillow.com/mortgage-calculator/  (this particular calculator includes taxes and PMI insurance, which gives a more accurate number) and enter the price of the home you are considering. Calculate what your monthly mortgage payments would be.

For several months put this amount of money aside to see if you can manage the payments comfortably. If you are currently paying rent or a mortgage, set aside any difference in your current mortgage and your “goal” house.

The point of this exercise is to see if you are being realistic about your income and what you can really afford. If you determine the mortgage amount is one you can live with, you can confidently take steps toward a purchase. If not, you may need to set your sights on a lower priced house, or alternately try to adjust your other expenditures. Either way, this experiment will give you a better idea of your ability to pay for the house comfortably.

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About christinahammondhomes

Christina Hammond is currently a real estate agent for Keller Williams Greater Athens in Athens, Georgia. Her interests in real estate began when she was an undergraduate at Arizona State University, where she studied business and psychology. During her years at ASU, she apprenticed with one of the top producing real estate brokers in the area, learning the details of real estate sales in a large metropolitan area. This practical experience, combined with her university studies, further increased her interest in real estate as a career. Christina excels in developing close working relationships with clients that often grow into long term friendships. She has 15 years of real estate experience, the last 8 in the Athens area. As in Phoenix, she has fostered many connections with her clients and finds this part of her work more satisfying in this smaller venue. As Christina says, “It is enormously rewarding to help a client find a home that is right for them. Homes are the physical manifestation of many people’s dreams, and it is hard to express the satisfaction of helping someone find a home that they love.” Of course, selling real estate requires shrewd understanding of the market and competing forces. Such skills were honed through her academic experience, understanding legal contracts, business negotiations, market competition, etcetera. But from Christina’s perspective, real estate is fundamentally about the people, rather than just buying and selling. When she is contracted, her obligation to her client is paramount, and she will represent them as assertively as is necessary. Christina states, “You learn quickly that in a big city, as well as a smaller community, a great agent must be thorough and aggressive, so that the client can know that their interests are being managed effectively, and it allows them to relax and focus on the big picture.”
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