Buying a Tulsa home is exciting, whether it’s your first one or your 21st one. Seeking out a new abode really gets the adrenaline pumping. When your lender approves you for a higher amount than you expected, you might feel like swinging for the fences and looking at properties you may not have considered before. But that could lead you to become “house poor”. That’s when your Tulsa home absorbs just about every cent you earn. In turn, that leaves you nothing to actually enjoy your life outside of your house. Keep this in mind: just because your lender approved you for it does not mean you must spend it.
Avoid Being a “House Poor” Tulsa Homeowner
Take a Realistic Look at Expenses
It takes more than a down payment to purchase a Tulsa home. Consider closing costs (about 1.5% to 3% of the purchase price), taxes, inspection costs, etc. And that’s before you actually move in. Unless you pay cash, you need to think about your mortgage payment, taxes, insurance, utility costs, and maintenance costs. Then, add in your other expenses (credit cards, car payments, student loans, groceries, entertainment). After that, budget in an emergency fund to take care of things that appear as if out of nowhere (plumbing failure, broken window, bad hot water heater). Compare that to what you and your significant other (if applicable) earn each month. This helps you set a realistic picture of what you can afford without becoming “house poor”.
Remember Two Numbers: 28 and 36
To avoid the stress of making your Tulsa house payment each month, experts suggest you keep your household expenses to 28% or less of your gross monthly income. Plus, they suggest that you spend no more than 36% of your gross monthly income on your entire debt load (including credit cards, car payments, student loans, etc.). If you stick to these two numbers, you should find it much easier to take care of your household obligations.
Get Your Credit in Tip-Top Shape
While you might not reach 850 status (a perfect credit score), you need to make sure your score puts its best face forward when applying for a home loan. Why? Because better credit scores help you secure lower interest rates. In turn, that lowers your monthly mortgage payment. Visit AnnualCreditReport.com to order your free report from each of the three reporting agencies: Experian, Equifax, and TransUnion. Check each report for errors. If you find any, contact the appropriate reporting agency, explain the issue, provide proof of the error, and ask that they remove it. This takes time, so do this as early on in your home-buying process as possible.
Sometimes, Less is More
Again, remember that you don’t have to spend the maximum amount you are approved for just because your lender gave you the “go-ahead”. If you want to maintain the lifestyle you currently enjoy without becoming “house poor”, manage your expectations. Stick to a budget that still allows you to travel, hunt, boat, camp, or any other hobby you enjoy instead. That makes for a very happy homeowner indeed.
Lori Cain, REALTOR®, Serving Midtown and the greater Tulsa, OK area. Call 918-852-5036.
[…] a stronger position when you put in an offer on a Tulsa home. But you do not want to become “house poor” either. So, just because a lender says you qualify for a certain amount does not mean you […]