Home Affordability??

This week I want to discuss the matter of "Home & Transportation Affordability". Fun stuff right? I know, I know, you can put away the confetti now, It's time to talk business now. In plain terms home affordability is how much you can afford to pay for a home. Here comes a little humor to lighten your spirits for the day:

First we state that homes require time and money
Homes= Time x Money
As we all know "Time is Money."
Time= Money
Therefore:
Homes= Money x Money = (Money)ˆ2
And because "money is the root of all evil":
Money=√evil
Therefore:
Houses= (√evil)ˆ2
And we are forced to conclude:
Houses= evil
Hope that brightened your day because it surely made mine.

As a homebuyer, it is important that you determine your affordability based on the inherent economics of your home purchase and not on your ability to qualify for a mortgage.

As a homebuyer, it’s important to determine affordability based on your pocketbook. Can you make the mortgage payments without compromising on your quality of life? Can you balance your checkbook? Do you believe your home will appreciate over a 3, 5 year period? Can you ride out a decline in home prices ? The hype from the realtor aside, how much would you ‘really’ pay for this house?

The bottom line: Affordability calculators are useful, but use them only as a guideline. Start with your net income (gross income less taxes, social security, Medicare, retirement and other deductions), back out your mortgage payments, other debt payments and expenditures and stare at the balance. Are you comfortable with it? Are you saving enough to meet the needs of your family? If so, go ahead and buy.

Have a great day all,

Sincerely,

Dana Washington