Budget, Budget, Budget

Anyone who is interested in purchasing a home often makes the mistake of overlooking his budget. It is normal for anyone to focus his attention on the amenities, facilities, unit size, and such if it is a condominium unit or apartment. For those who are more interested in houses and lots, they focus on the lot’s square footage, how many rooms it has, toilets and baths, garden setup, and the like.


Although there is nothing wrong with these, as you want your home to be the perfect abode, what’s wrong is forgetting about the budget or basically what you can afford. There are plenty of people who fail to think twice and go for properties that are far beyond what their financial situation can accommodate. And this is the kind of decision that will lead you to the losing end of your real estate transaction.

You might think that you will eventually get a loan from a bank or lender because you have already been pre-approved. What you should understand is that pre-approval does not amount to anything. It is not a guarantee of any financing. It basically means your application has been considered and your line of credit has been assessed. Based on those, you are qualified to take out a loan.

But when you actually start applying for financing, the lender will assess the property of your choosing. This is because they will be making an investment in that property as well. If you fail to meet your mortgage payments, the property becomes theirs. So if they don’t see as much value in it, they might not lend you a cent or choose to grant you a loan in an amount that is not enough to cover the purchase.

Aside from the purchase itself, your mortgage broker will remind you that there are other expenses that you need to take care of. There are the interiors, furniture, appliances, and such. You also have fixed monthly costs from dues to utility bills. All in all, your housing expenses should not go beyond 30 percent of your monthly income. If it does, chances are you won’t be able to sustain it.

Also, when it comes to any debt, this should not exceed 40 percent of your income. Again, you won’t be able to sustain it. But sadly, there are still plenty of people who forget all about the budget. Some are luckily able to overcome the financial hurdle but many fail to do so. This is why you should not get yourself in such a problematic situation. You can avoid it by being smart.

Your financial situation can change at any moment and this is why you need to have some money left over just in case any emergencies arise. When buying property, don’t think that your salary will eventually rise and your expenses will fall. Not that it wouldn’t, but you should go with the safer route and be conservative when it comes to your financial assessment. This will ensure that you will have a far better chance of meeting your financial obligations.