One of the most popular questions we get asked when sitting down with first-time home buyers is, “How much can I afford?” which essentially is the question, “How much will my monthly payment be?” Many people live in terms of monthly payments when it comes to things such as homes, cars, and so on, which means understanding the amount of home you can afford in terms of a monthly payment is very common.
One thing we try to remind buyers when meeting with them is not just to consider how much they can afford to pay monthly for their new home, but how their current lifestyle factors into buying a home.
It’s only normal to be accustomed to living a certain way, whether you’re big on travel, going out to eat, or planning for retirement. When buying a home, there are often costs associated with home ownership that you may not have considered when first setting your home buying budget. Take those costs, plus your monthly mortgage payment, and there could be very little wiggle room left for anything else. That is if you don’t plan ahead.
Here are just a few lifestyle factors you may want to keep in mind when determining how much you can afford each month.
Travel
Setting aside time and money to travel is not a new idea by any means, but it is one that seems to grow more popular by the generation. Whether you plan on taking a few small trips throughout the year, or have your eyes set on a big annual expedition, any travel costs money. From flights or car rental to lodging to sightseeing, it’s a good idea to at least consider how much you may need to set aside for traveling.
Dining out and other entertainment
Raise your hand if you like a good dinner out, brunching with girlfriends on the weekend or hitting up a concert from time to time. Just what we thought, you all do—hey, so do we. One thing we hear many new homeowners say is that they will have to cut back on wants like these to make room for homeownership. It’s important to decide how much entertainment you want to cut out of your lifestyle before deciding how much you want to spend on your new home. If you cut too much out, you may start to regret your purchase, and buyers remorse is hard to alleviate when we’re talking a 30-year mortgage.
Getting outdoors
Living in Florida, many homebuyers often want a home with a large yard, a golf course, or a pool. Who doesn't want to enjoy soaking in a little Vitamin C on the weekends? While having a pool or a golf membership may seem like a dream, these luxuries will carry some additional costs. Be sure to factor the price of pool maintenance or golf club memberships into your budget ahead of time to make sure these are true must-have in your next home.
Children
It’s one thing to factor in how much home you can afford under your current budget, but, if you have yet to start a family and plan to do so in the coming years, you may want to factor in some costs for that now. Think daycare, medical expenses, diapers, formula and so on. Not sure how much that may costs? Ask friends or family members with children for a ballpark number and add that to your home buying budget to allow for this future (albeit adorable) expense.
Retirement
While retirement may or may not be years away for you, planning for it may be something you're already doing today. Our friend, Dave Ramsey, advises that people put 15% of their income each month toward retirement planning for retirement. Have you remembered to factor that number into your new budget? We would hate for you to skimp on something as important as your future in order to purchase your dream home now.
Buying a home in Central Florida with your current lifestyle in mind is important. It will ensure you are happy with the choice you make and can really enjoy your dream home for years to come!
