Why You May Not Want To Max Out Your Budget On A California Home

by Brian Lacklen 12/03/2018

Once you have checked your credit and had all of your paperwork in order to get a mortgage on a home, you’ll be excited to get the process started finally. Buying a home is an emotional process. You shouldn’t let your emotions get in the way of the practical things in your life like your budget. It can be easy to overspend on anything when your emotions are high.  

You certainly don’t want to go into debt before you apply for a home loan. The lender takes a look at your income and debt-to-income ratio. This will help them to determine how much you can spend on a house. Many people may be surprised at how much they can spend on a home. 

If a bank is willing to lend you a certain amount of money, does that mean that you should spend that amount on a home? The short answer is probably not. Although it can be hard to resist buying a big, beautiful California dream home when you have been approved for a large amount, you have to consider many more aspects of your life other than your monthly mortgage payment. Below, you’ll find some other factors that you should consider before you decide to max out your budget on a California home. 

The Lender Doesn’t Live With You

While you feel as though the lender is digging through all of your finances, they really aren’t. When you apply for a mortgage, no one is looking at your monthly auto insurance payments, how much you spend on groceries, health insurance, and extras like entertainment. These expenses prove the reality is that you should probably pay less for a home than you think you can afford in order to keep your financial picture in good standing. 

Things Break

You need to have some sort of a financial cushion in case repairs need to be made in your home. Anything could need to be replaced with the dishwasher to the roof. You don’t want your budget to be stretched so thin that you have no cash leftover for anything that needs to be addressed in your house.

You’ll Be Able To Do More With Your Money

Your dollars need to stretch far past your mortgage payments. You’ll need to save for things like retirement, an emergency fund, and more. It’s not a bad idea to have a bit of extra money for things like vacations or other entertainment. Don’t neglect your future just because you fall in love with a home.


About the Author

Brian Lacklen
Hi, I'm Brian Lacklen and I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.