Does your house impoverish you?

Image result for house financesTo be impoverished by our house is not pleasant. This means that you can not afford the house in which you live and probably rely on credit to stay afloat, therefore, that you accumulate even more debts that you can not repay. You see what it means to be impoverished by his house is not a good thing. There is, however, light at the end of the tunnel: you have full control of your finances and you can change your situation. We want you to own a big house, but do not want you to borrow more than you can pay back. So let’s take a look at what being impoverished by his house really means and how to prevent or fix such a situation.

How do you know if your house is depleting you?

 

As mentioned above, being impoverished by one’s house means that you can not pay for the house in which you live. This may have a different meaning for everyone, but if one or more of the following points to your current situation, it may be time to re-evaluate your living conditions.

  • Do you have large amounts due on multiple credit cards?
  • Do you rely heavily on your credit cards to pay for necessities like groceries?
  • Have you given up family vacations or other travel opportunities because you have to make a mortgage payment?
  • Do you have to restrict and save for months to make payments for your property or school tax?
  • Do you spend more than 30-35% of your income on housing?
  • Are you constantly concerned about the cost of the house in which you live?

Once again, everyone’s financial situation is different, so it’s important to evaluate yours according to your problems and where you want to go.

Main reasons to be impoverished by his house

Main reasons to be impoverished by his house

 

Buying a house that is too expensive is certainly the most common reason people get poorer, but there are many other reasons as well. Let’s look at some of these reasons and how they can be solved or avoided.

Let your lender decide how much mortgage you can have

This goes hand in hand with buying a house that is too expensive, but it’s important to remember it. When you apply for a mortgage, you are approved for a certain amount of money, but there is no rule that says you have to buy a home that uses all of your mortgage. If you have a stable job with a high income or are a two-income family, the chances of being approved for a high mortgage are great. Receiving an amount from the bank does not mean that you have to spend it all. Decide on a budget that you can afford and then look for a house that fits that budget. Buying a $ 500,000 home simply because you’ve been approved for a $ 500,000 loan is not a good idea.

Loss of employment or income reduction

Nobody wants to lose their job but it happens. So, when deciding to buy a house, you should take into consideration whether or not you would be able to live there if you lost your job. Unfortunately, we can not predict the future, but we can prepare for it. Make sure you have enough savings to survive for at least a few months, allowing you to continue making your mortgage payments while looking for a new job.

No emergency or savings fund

Living in a house is expensive, no matter how you go about it. Apart from your mortgage payments, there are many other expenses that you should consider. Having an emergency fund will help you deal with unforeseen expenses.

Too much consumer debt

If you already have a significant amount of consumer debt before taking a mortgage, you are lining up for a seriously unstable financial future. Unfortunately, you would become considerably poorer if all your disposable income went towards the repayment of these debts. To solve the problem, you must consider paying your debts before buying a house. Maybe that would change your goals, but buying a house when the rest of the finances are in order is a much better option.

How to avoid getting poor with your house

How to avoid getting poor with your house

 

The logical answer to this question would obviously be not to buy a house. We understand that it’s easier said than done, and often you can not even know how much you can afford for a home. Here are some important tips to avoid getting poorer when you buy a house:

  • The Government of Canada suggests that you should not spend more than 30% of your salary on housing. The first thing is to understand what represents 30% of your income actually. (PS 30% is good, but aiming lower to start is even better)
  • Then understand what your housing costs will really be. Indeed, as an index, these are always higher than your mortgage payment. Think about property taxes and school taxes, public services, lawn care, emergencies, repairs and of course, your mortgage payments.
  • Then you need to know how much you can afford to add to your monthly budget. Let’s say you have decided that you can afford to allocate $ 3,000 of your monthly budget to your housing costs. This means that everything mentioned in the list above must arrive at $ 3000 or less every month. Do not even think of homes that would be outside your price range.
  • You will also need to save for one-time costs related to the move. This may include a down payment, closing costs, moving expenses and possibly repairs that must be made before moving in.
  • It would also be nice to consider all other costs that might not fall into the housing category. Car payments or public transit fees, gas, auto insurance, groceries, health care, cellular bills etc.
  • Try living with your new budget before buying a house. This will allow you to get used to living on a tighter budget but will give you time to adjust as needed. The most important thing to remember is that budgets, revenues and debts are all different. While the government suggests 30% of your income for housing and ensuring you always have a good financial situation, we are not all able to follow this advice. Owning a house is expensive and if you want to stay afloat, you need to adjust your budget and savings to suit your situation.

 

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