Tally Your Expenses — All of Them

Be honest about what you spend and what you can afford house-wise. These are the everyday expenses you need to consider when making a budget for your mortgage.
Couple Talking to a Man.

Couple Works Out Budget for Kitchen Renovation

This couple talks with a financial adviser after making the decision to renovate their kitchen. Having a budget to work within will keep the project in line with finances.

Photo by: Jupiterimages

Jupiterimages

By: Tammy Stoner
Related To:

In all your excitement about the prospect of buying a house, you'll be tempted to twist your financial numbers so you appear more desirable to a potential lender. Instead of admitting the balance on your Visa is $7,000, give a more rosy figure of $5,000. It will be lower in a few months, right?

Remember: Buy too much house and you’ll be flat on your back financially. Be honest about what you spend and what you can afford house-wise. If you need more encouragement to be harshly honest about your expenses and comfort zone of monthly repayment, simply look at the number of home foreclosures nationwide this week.

Before you decide how much you can afford in monthly mortgage payments, calculate your expenses, including (as applicable):

  • Loans - car, student, etc.
  • Insurance - home, car, life, etc.
  • Credit Cards
  • Utilities
  • Property Taxes (based on cost of the home you are interested in, or your own home -- for questions, call your local tax collector since rates vary)
  • Food and Entertainment
  • Kids’ School
  • Retirement Accounts
  • Car Payment
  • Gifts
  • Doctors
  • Vacations
  • Charitable Contributions

And yes, lenders will ask for paperwork backing up all these numbers.

In a competitive market, consider preparing this monthly expenses checklist and collecting all associated paperwork (including bank statement, pay stubs, and tax returns) to get pre-approved for a mortgage amount. Though this isn’t written in stone, it will show sellers that you are serious. It will also help to keep you in check when you fall in love with a home priced too far out of your pre-approved range.

Next Up

Scheduling Your Relocation

If you can postpone your move, you could save some major cash.

Sell the Benefits of Your Smaller Home

Impress buyers with money-saving and eco-friendly features.

Sellers: What to Do When You Can't Find a Home Before Yours Sells

Did you sell your home so quickly you're worried you can't find a new home in time? See how one woman solved the problem.

Learn the Pros and Cons of a Buyer's Agent

Learn about the advantages and disadvantages of hiring a buyer's agent when looking to purchase a new home.

Saving Money While Paying for a Home

You may be financially "exhausted" from saving for your home purchase, but now's actually a great time to keep saving.

Moving Day Tips: How to Pack for a Move

These 10 packing tips will help you move more efficiently and smoothly.

Did I Accept a Bad Offer on My Home?

Worried you accepted a bad offer for your home? Let real estate expert soothe your fears.

Provide Easy Access For Showings

Opening up beyond the open house.

How to Recession-Proof Your Home Purchase

First-time homebuyers, word to the wise: Look for attributes that add value to your new home to help combat falling prices. Here, basic guidelines to follow.

Q&A: A NYC Broker on the Benefits of 'Test Driving' Homes

On the fence about a prospective home? Some brokers are letting buyers try out homes before they sign on the dotted line.

Related Pages