Owning a home is a huge responsibility. When purchasing a home, we tend to initially think of the starting costs, the initial investment. But what about the long-term investment? And not only that, what about being able to continue to invest in your property without selling off your soul?
Okay, I may be over exaggerating a bit but you want to be able to live comfortably while paying for your home and being able to save for a rainy day as well.
Sometimes when we get that pre-approval letter from a bank, we think, “YES! I got a pre-approval for $900,000, now I can afford to buy a home for $900,000!!!” But, in all reality, it may be best to pay less than that. Sure, you got the that pre-approval amount but that doesn’t mean that you need to go to the top. You may not be able to comfortably pay the monthly payment that comes along with borrowing so much money.
In fact, I would say not to do it unless you are certain that you can pay the monthly fees associated with your home, save, AND be able to maintain your personal life without having to kill yourself with over time, finding a 4th part-time job, or not living with electricity.
I found a a great tool that you can use to help you with figuring out what your comfort zone would be!
Check out this calculator which will work backwards from what you can afford monthly to what your purchase price should be around. Keep in mind, this is only an estimation. The exact numbers will depend on your credit, income, and a multitude of other nooks and crannies.
Hope this helps!