House payments are an exciting, and sometimes scary, thing to take on with any budget.  You should know what you’re up against and be prepared ahead of time- but the real question is how to learn.  Crunching the numbers and going over your current budget is good, but how can you be sure that you’re making the best financial decision?

Ask yourself these questions, and you realize whether you’re prepared.

How Much Do You Currently Spend On Rent?

Most prospective home buyers are currently renting somewhere.  Consider how much you’re now spending on rent and whether that number is your maximum.  Do you find yourself having to cut back on spending at the beginning of the month because of rent payments?  Or, do you instead see that there’s still a lot of room in your budget?  This monthly payment can show you one way or another which decision you need to make.

Do You See Any Life Changes Approaching?

Are you moving in together with a partner?  This change could push up how much income you have and give you more wiggle room.  Are you, instead, considering starting having kids?  If that’s the case, your budget will tighten over the next couple of years, and what you can afford may shrink.  Consider what you see happening in your life over the next five or ten years, and then think about how that will affect your budget.  Although nobody has a clear vision of their future, it’s good to have a general goal.

Should You Spend More Than 25 Percent?

Some financial professionals will tell you that 33% is the goal you should aim for, but you should try to spend even less.  Keeping your house payment at a quarter of your income or lower gives you a chance to save money and enjoy life more.  Although you could feasibly live off higher-priced house payments, that money takes away from the capital you could spend decorating and having fun in your new home.  Being ‘house poor’ isn’t fun for anyone, so giving up a couple of hundred square feet to fit in a more conservative budget may be worth it.

What Do Your Finances Say?

Although you may have found a home that you’ve fallen in love with, or you think you’re emotionally ready for this next step- your finances may disagree.  Look at your income, and then use a house payment calculator to decide whether a home would fit your expenses.  Although you can rework your budget to lower the amount you spend on things like entertainment or ordering in food, you should also be aware of the importance of not giving up too much.  If you tighten your financial belt too much and try to cut out too many things that bring you joy in life- you could end up swinging the other way.  Too many missed payments can ruin your credit, could hurt your financial standing, and could have your home foreclosed on.  Make choices that you know you will be able to handle for the long term.

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