Many home buyers who are purchasing a home in or around Denver for the first time have no idea exactly how to figure out how much house is enough, and how much is too much. There are some key points to take into consideration when purchasing a home. The home buyer will need to examine their budgets, their finances and the potential real estate assets closely in order to be able to make an informed investment decision.
People make careers out of writing books to tell us how to budget our money, how to manage our finances and how to get the most bang for our buck. There is one major problem with all of them however. They do not include any “real-world” variables. Not everybody is a whiz with finances, able to live off very little money and spend only what is necessary while dutifully saving the rest.
Then there are the minor inconveniences, which are so frequent in the real world and so seemingly unimportant to the authors of those books. The car breaks down, the kids braces need to be replaced, the dog’s vet bill was what?!
When people rent or lease a home, they do not freely associate many costs with home ownership. If the garbage disposal breaks at two in the morning, all we have to do is call the property owner or the maintenance person and they fix it. When the homeowner has a problem, the costs multiply rapidly. Throw that in on top of the normal costs of life itself, and it should be easy to see that the potential homeowner needs to look beyond what they pay for rent as a basis to decide how much home they can or cannot afford.
Our recommended mortgage professionals can also be a great resource as you prepare to buy a home. They have been trained to take a consultative approach (ie. not pushy and not “salesy”) to help you better understand the total costs of homeownership.
For over ninety percent of the population, a home purchase will be the single largest financial investment of their life. Care should be taken so that investment lasts for a lifetime and not neglected, or worse yet foreclosed or lost due to poor financial planning.
Ideally, the homeowner should be able to pay the major bills with what he or she earns in two weeks. If all of the bills can comfortably be paid with the pay that is earned in three weeks, it is still viable, but there will not be many luxuries available to the homeowner until such a time as the mortgage is paid off.
If you are looking to purchase a home, especially for the first time, make sure that all of the bills can be paid at the very least with three weeks earnings. There will always be unforeseen circumstances which arise as a part of every day life. Financial planning must be completed in such a manner as to allow you to have a way and a means of paying all of the bills, no matter what eventuality arises. Careful budgeting and financial planning before purchasing a home is imperative! We don’t want you to just live, we want you to THRIVE!