How Much Home Can I Afford?: Common Money Advice Series

When buying a home, many people are taken aback when they hear how much mortgage they can qualify for. But do you really need a loan or home that size?

In today’s episode of Your Money Minute with Tracy Stewart, CPA, I want to discuss why you should always talk with a financial advisor before buying a home. Yes, real estate ownership is amazing — and it’s a great way to build your investments. But the goals of you and your real estate agent might not be congruent when they share with you how much home you can qualify for.

The real estate industry wants you to be happy with your home. They want you to love it, love your agent and want to upgrade and do more with your investment in the future. But they also want you to spend as much money as possible each and every time — because the business is commissions-based. This means, the bigger the ticket — the bigger the payout they walk away with.

When your real estate agent shares a mortgage amount to you, take this with a grain of salt. Yes, your numbers might support it — but with very, very little wiggle room. That’s why I encourage you to talk with a financial advisor first when buying a home. Why?

Your financial advisor will help you crunch numbers, understand your income and cash flow needs, and make a recommendation for the mortgage amount and home size you should shoot for. The other consideration is that home costs aren’t just the mortgage — but also include repairs and maintenance. Be cautious as you search for that perfect home, knowing that you’ll want to spend wisely to avoid stress and hardship down the road.

Financial independence is unbelievably liberating. Get solid, unbiased feedback on your finances before you purchase your home, so you can avoid the remorse and repercussions of spending outside your means years later.

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