May 2007 Vol. 2 No. 5
 Can You Really Afford That Mortgage Payment?  May's Home Value Improver  About Us

Can You Really Afford That Mortgage Payment?

A macaroni millionaire is an old term for people who buy a house that makes them look rich, but they can only afford to eat pasta because of their giant mortgage.

Finding the perfect house is almost as difficult as figuring out how much you can afford to pay for it. Sure, some mortgage brokers will try to give you a formula to help you figure out how much house you can buy. But how many big life decisions can you make based on a simple formula? None. Everyone has a different lifestyle, different expenses, and different goals.

For a more accurate way of figuring out how much you can afford, take a close and realistic look at your income and expenses. A good mortgage broker can do this with you and help you figure out this detailed equation, which is much more effective than relying exclusively on a simple formula.

Remember that buying a house comes with several big expenses above and beyond your mortgage. Consider:

  1. Local taxes and insurance. They can make your PITI (principal, interest, taxes, and insurance) payment significantly more than you had planned.
  2. Closing costs. It will cost at least a few thousand dollars simply to purchase the home.
  3. Real estate transfer tax. Some areas that are trying to restrict growth or raise money for conservation will add an additional tax on real estate transfers. For example, purchasing a home on Cape Cod comes with an additional tax.
  4. Home improvements. Renovation and construction needs can surprise you after you move into a new house. Be sure you know ahead of time what changes you will want to make and how you will pay for them.
  5. Furniture. You'll want to fill your new home with furniture you love. Be sure you're not flat broke after you close and end up eating dinner from a turned- over moving box for more than just moving day.
  6. Commuting expense changes. With gas as $50 a tank for many people, a move that entails doubling your commuting time can have some significant financial consequences.
It's also important to remember to take your own expenses and lifestyle into account.
  1. Are you saddled with big student or credit card loans? Consider the debts you have to pay every month.
  2. Do you like to drive the latest and greatest new car? Will you always have an expensive car or is your favorite type of car the type that is paid off?
  3. Do you like to take a luxurious vacation every year? Some people would rather a quiet week at the Cape with friends. Don't empty your vacation account if it's something that means a lot to you.
  4. Is your kitchen stocked with just drinks and cereal? If you dine out frequently, and never bring your lunch, consider what you spend on food each week.
  5. Does quitting your job and backpacking around South America sound like something you are planning in the near future? Consider how long you will be able to enjoy your current job and salary while still enjoying your life.
Once you have taken a good look at all of your current and potential expenses, you will have a much better idea of what you can afford. You then can go into house hunting confidently, without being tempted to get that house that's "just a teeny bit" more expensive.

Remember, too, that although you may be prepared mentally and emotionally to buy a house, you may not be ready financially. There is nothing wrong with that. Many of us want the American Dream, but not at the expense of drastically changing our lifestyle.

A good mortgage broker will sit down with you and go over your expenses, lifestyles, and goals. She or he will match those up with what you can afford for a mortgage. Do some of your own research, too. Ask family and friends about any unexpected expenses they incurred when they bought their house.

Take the time to make sure you don't become a macaroni millionaire!

Visit our website today for more tips on how to make smart mortgage decisions!

May's Home Value Improver

Stage Your House For Optimum Showings

The days of staking a "For Sale" sign in your front yard and making the beds as your only preparations to selling your house are over. In today's competitive real estate sales market, a house that is "staged" well will stand out in a buyer's mind. You want to create a comfortable, warm feeling to potential buyers who will be able to imagine themselves pleasantly living in your home.

Take these important steps to make your house more attractive to buyers:

  • Remove clutter, which is your worst enemy. Make sure that entry closets, garages, and other potentially crowded areas of the house are neat and sparse so that potential buyers can imagine their own items there.
  • Let the sun shine in! Open drapes and curtains to let the light in. Everyone loves a home with good light.
  • Clean out your fireplace and arrange fresh logs. You may even want to put a fire on it is cold outside. This will give your house an extra cozy feel.
  • Keep pets, and all evidence of them, out of sight. Not everyone sees love in the eyes of dogs and cats. Some see litter boxes, allergens, and odors.
  • Keep your refrigerator clear of magnets and photos. You may think this is silly until you do it, and see how much nicer the refrigerator looks.
  • Remove too much personalization. Your hockey trophy and the photo of your fraternity brothers may mean the world to you, but a potential buyer wants to imagine him or herself in the house - not you.
  • Hang the cleanest towels you have in your bathrooms. Do not overlook this detail, which will contribute to your home looking fresh and clean.
  • Put a vase of fresh flowers on the kitchen table or other spots. Fresh flowers are a beautiful and inexpensive decoration for anywhere in the house - even the bathroom.
  • Put large furniture in storage. If you have any furniture that is large enough to make a room look small and crowded, put it in storage to make the house look roomier.
  • Set your dining room table. A dinner party setting will make potential buyers envision themselves entertaining there - something just about everyone wants to do in their new home.
  • Don't forget the garage. Clean up oil stains and organize storage. Potential buyers will see storage potential better in an area that is neat and clean.

It's been a busy month for me, as my home has welcomed a new member! My husband, Kevin, and I had our first child on May 5. Hannah Ruth Hill was born at 6:10 am weighing 5 pounds, 4 ounces. We couldn't be happier, though a little sleep would be nice!

If you've recently welcomed a new family member and a new home is in your future, please give me a call.

I'm always happy to answer your questions about mortgages. Consider me your mortgage resource!

Best regards,
Debbie Siegel
Westchester Mortgage

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Westchester Mortgage.
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