Rob Carrick says online mortgage affordability tools are missing the cost of the rest of your life
The problem with online mortgage affordability tools is that they look at just three things – your income, your debt and your projected ownership costs based on mortgage payments plus property taxes and utilities.
Mortgage lenders expect you to figure out your lifestyle spending after you’ve bought a home, which is how new owners have done it for decades. A better way is to assess the affordability of the lifestyle you want to live before you buy. Let me introduce you to an online tool that can help in this analysis. It’s called The Realistic Affordability Budget and you can download it
The 2.0 version invites you to add your net monthly income and then lays out a detailed list of expenses covering housing, food, transportation, entertainment, travel, gifts and charitable donations and savings/investments. Estimate a frugal and less restrained level of spending in each category and then let the worksheet show how much money would be left at month’s end under both spending models.
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