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Finding a Healthy Balance Between Budgets and Mortgages

Budget Balance

There are a lot of formulas out there to determine the "right" amount to spend on a home. 30% of your income is a number that's often thrown out, but does that include insurance and property taxes? Is that 30% taken from your gross or net income? Here are a few guidelines to help you find a healthy balance between your income and housing expenses.

1.Take all housing costs into consideration.

This includes homeowners' insurance, private mortgage insurance (PMI), property taxes, HOA fees, etc. You could even throw in some extra for additional home-related costs, such as lawn care and appliance upgrades, to be on the safe side. Unexpected costs will pop up and it's smart to plan for them in your budget.

2.Determine your take-home pay and monthly expenses.

Some formulas for determining housing costs use your gross income as a starting point. However, it's always smart to know exactly how much you have coming in and going out. Can't live without a monthly massage or that expensive gym membership? Take those expenses in to consideration when looking at your overall budget.

3.What can you comfortably afford?

30% of $500,000 will still leave plenty of money left over for other expenses. 30% of $30,000 will not. Home buying calculators online will typically come up with a number that reflects how much a lender would be willing to give you. Oftentimes this is the high end of your budget and doesn't necessarily mean you should take all the money they're willing to lend you.

One way to "test drive" a mortgage payment is to determine the difference between your current payment (or rent) and your new mortgage. Put the extra money you would be spending on a new mortgage in your savings account for six months. If you're still able to live comfortably and not struggle to make your monthly payments, your new mortgage is a healthy portion of your income.

The best way to find a good balance between your mortgage and other living expenses is to talk it over with a trusted mortgage lender. They'll be able to look at your finances and give you an unbiased opinion on a safe monthly payment that won't leave you house-poor and full of buyer's remorse.

Citywide Home Loans make the loan process simple. Visit to see how much home you can afford and find a loan program that's right for you.