How to Comfortably Afford a House You Love

Want to buy a house that you love and still comfortably afford? Find out how you can run the numbers so you can become a homeowner while still pursuing other goals!

How Much House Can We Afford?

Even though buying a house is typically the biggest purchase you're going to make, we kind of snap into this passive mode during the process.

As you're getting a mortgage, part of it includes finding out how much of a house you can afford or what kind of mortgage you can take on.

You'll get a pre-approval letter from your lender based on their calculations, but that's not always the right number for you.

Why?

Because they're trying to find what's the most that you can afford.

If you're a part of the simplify and enjoy community, you're looking at what's going to give you the most flexibility and options for your other goals as well.

So today, Karen Ashley, the mortgage sales manager at Coastal Credit Union, is going to walk us through the process of finding that sweet spot where you can buy a home that you love while still having money to pursue your other dreams and goals.

You watch the below right here or read the notes below!

Figuring Out Your House Buying Budget

Karen: When a couple or a member is shopping for a house, one of the main things that they need to consider first and foremost is affordability.

What you can for is their comfort level.

We get the question so many times – what do I qualify for?

Well, we can run the numbers and tell you you qualify for, you know, four or five hundred thousand dollar house. But I never like to tell a borrower exactly what they qualify for.

My question to them is, where's your comfort level? Where is your comfort level with that payment? Where do you not want to go over?

Then I back into that payment, because the last thing you want to do is put someone in a home to where that's all that they're working for.

It's just that house payment because you are going to need some money for the incidentals, the maintenance, the care of the home.

So I always want to know where is your comfort level? And then from there, we just we back into what that sales price looks like.

Then we would talk about do they want to do the hundred percent financing? Do they qualify as a first time homebuyer? Does it make more sense to maybe keep your money in the bank with rates being so low right now?

Yeah. So we would just run some scenarios for them to just kind of show them. It makes more sense to do the hundred percent if they qualify or put 3 percent down with mortgage insurance versus 5 percent.

And then we just kind of back into what fits that member best financially, both money out of pocket and down payment and payment in for their comfort level is.

Why You Need to Run Your Own Numbers

Not sounds obvious to do this, but based on our experience, not all lenders go with that approach.

My husband and I, we've bought two houses, the first one (a townhouse) was with another lender and the second one actually was Coastal Credit Union.

There was a difference in how things were approached between the two lenders.

I don't think typically there are enough conversations between the lender and you about the affordability of a home.

We didn't get any of that the first time, so it was an instant difference went we sought a mortgage through Coastal for our current place.

With the first one, it was like ‘how much can you technically afford? What's your limit?

Owning a home can be a wonderful financial move, especially if you have kids for that stability. But there are other financial goals, right?

Like travel. Save retirement. If you want to help out with the kids, these are all things to think about.

With many lender's it's a bit too automated. There's no conversation. It's almost like a computer spits it out and that's your answer.

So while you certainly want to go over with your potential lender about your budget, it really does matter for you to run the numbers yourself.

Find The Best House (and Mortgage) for You

If you're in the Triangle area here in North Carolina, definitely check out Coastal, they have a wonderful team here that want you to live better by banking better.

Yes, they are sponsoring the podcast, but we have been members for years and we are so happy with the house we're in and the mortgage we got.

We can afford that and take vacations and some other goals!

I hope this helps you out with finding a budget that gives you the flexibility of pursuing your other goals while finding a home that you love.