Why Are So Many People Getting Foreclosed On By Mortgage Companies?

There are a lot of people out there in the USA getting foreclosed on by the mortgage companies because they can’t make their monthly mortgage payments. Many things can happen that would cause the bank to foreclose upon a home but it mostly comes down to the mortgage payment.

Once you miss a few monthly payments to your mortgage lender they will start the process of foreclosure. It doesn’t take a year or two because by then the mortgage lender has already lost a lot of money, and losing even more by not making interest on your money elsewhere.

In most situations, for the average home owners, a person or couple will go to the bank clueless about mortgage loans and ask “How much can I afford“. At that point they’re leaving their finances up to the bank and accept whatever they get. The banks figure out the most you can afford and the average home owner will go out and start looking for a home at the peak of what they can afford.

A few things can happen from there. First the bank figures out, based on your income and monthly bills, that you can afford “X” which we’ll say is $1,300 per month. Then they use a mortgage calculator to see how much a mortgage payment will be over 30 years at the current interest rate until they get a number around $900-1000. Finally, the bank gets an average amount of taxes in the surrounding towns on that worth of home and add it to the $900-1000 getting a number very close to $1,300.

Then they simply tell the future home owner that they can afford that amount of home. I’m not sure I understand why everyone wants to get a mortgage payment that meets their absolute maximum monthly spending, but it seems people want even more than that.

If a car dealer said you could afford up to $65,000 for a car loan would you start looking at exactly $65,000 cars? Or would you think reasonably about it and get a $30,000 loan so you can have a little monthly spending money? Usually people are reasonable about a car loan but for some reason complete morons about a mortgage loan. Not the best idea when you’re buying 5-10 times as much as you spend on your car…

Anyways, all frustration aside, any minor thing that happens to you or your spouse could possibly put your monthly bills higher than your income. If one of you loses your job forget it, consider the home as good as gone. Assume your car all the sudden has an extra problem once a month that costs you $200 each time. I could go on for days about additional bills, loss of hours, loss of commission or even pregnancy that would cause a foreclosure.

What You SHOULD Do If You’re Looking To Buy a Home 

Act as if you’re buying a car. Know and understand ALL of the monthly bills you’ll have, then back off about $500 so that you can either save money in the bank for possible problems or spend some extra money each month on things you like to do. Having a bigger home isn’t the best thing in the world, trust me. Buy a smaller home and use the extra monthly money to spice the place up a bit. Get new rugs, new paint and nice things to hang up.

That’s where you’ll get the compliments from your friends and family. They’ll say, “Wow this place is SO nice!” instead of “It’s really big, but the inside needs som work“. Do you judge people when you walk into your friends and families homes? Do you really care if their home is that big or beautiful? Wouldn’t you rather afford it will ease, maybe add extra principal payments sometimes, go to the amusement park when you want and not freak out if your wife gets pregnant?

I actually bought well within my range and 3 years later I was able to afford another mortgage loan because it was only $35,000 for a 2 bedroom condo. My mortgage payment, taxes and condo fee added up to $550 and I just rented it using a property management company for $750. I can only imagine what I’ll make when I sell it in 5-10 years. I’m already making $200 per month anyways so I’m happy as can be about this investment.

Think before you act people. I’m sure your parents said that to you when you were little and it’s a cliche saying, but read it again and think about it. You’ll be much happier without living check to check trying to make every monthly payment you have with your last dollar.

Knowledge Will Save You Thousands
The Free Mortgage Calculator

Renting Costs More Per Month Than Buying A Home in 2011

I’ve been wondering why rental prices haven’t been coming down as fast as the price of real estate, so I researched it and started to understand very quickly. Real estate pricing has come down because there are a lot of people selling their home and very little amount of people buying homes.

That’s simple supply and demand. If you have a product that everyone else has it will be very hard to sell because everyone’s trying to get rid of their extra stock already. People are trying to sell their home in 4-5 months and it doesn’t happen, so they lower the price and it still doesn’t sell. Then prices continue to drop until it’s a great deal and a real estate invester picks it up.

The rental market is doing the opposite right now. Once all of these people finally sell their homes for a cheap price they need to rent an apartment in order to live. Well rentals are actually going up because investers are able to rent out each of their homes very quickly.

I’m assuming people are doubling up and sharing the rent of an appartment or else I don’t understand how they couldn’t afford their home but can afford more expensive rent.

You’re better off waiting and looking around for the next 4-5 months for a great deal on a home even if it’s a foreclosure or short sale. You can use a mortgage calculator to figure out the monthly mortgage payment, add in the monthly taxes and condo fee to get your total costs for the home. Then list it for for rent at $200-300 higher than that to make money. It’s actually a pretty simple formula now that this has happened.

Buying a home right now can be very hard especially if you’re not living in it because the banks need at least 20-25% for a down payment on an investment property. If you plan on living there you’ll only need about 5% at the most depending on your credit score.

It’s not as hard as you think to get a mortgage loan on a $35,000 mortgage for a 2 bedroom condo that rents out for $300 more than your monthly expenses. You can be buying a condo and taking the $300 extra monthly money and adding it to your first mortgage payment as principal. Then your renter is paying for one home and saving you thousands in interest on your primary home. Sounds like a good deal to me!

Knowledge Will Save You Thousands
The Free Mortgage Calculator

Getting Approved For a Mortgage With a Bad Credit Score

Getting approved for a mortgage with a bad credit score will be very difficult and I hope you’re not looking for a quick or magical answer here. No mortgage lender wants to approve you because you do pay back the loans that you get. If you did you’d have a good credit score.

“Well it was just this one time when I was in a bind”
“All I did was make late payments on my credit card”
“I didn’t pay my car loan but they took my car anyways so who cares”

All great excuses. No one is lowering your credit score because they don’t like you. Banks and mortgage lenders want your score to be high because, believe it or not, they WANT to loan you money. That’s how they make money and banks compete with each other to write the most mortgages. I’m sure you’ve also seen commercials of lenders WANTING to give you their money which means if your credit score is too low it is for a reason. You’re not going to get approved until you fix it.

You’ll need to start looking up “ways to improve your credit score” rather than “how to get approved with a bad credit score” because it’s not going to happen. Work on things like getting and paying a credit card or personal loan. That will build the banks trust that you’ll pay back a loan and raise your credit score each time you make the monthly payment.

Getting approved for a mortgage is a VERY big deal even for someone with perfect credit because you’re dealing with a lot of money. A lot of the banks money, not yours. If you loaned your friend $50 you’d be thinking about it every day until they paid you back. Well the bank isn’t your friend and they’re loaning you $150,000 or more so work with them and give them what they need to help you get approved for the loan and buy a home.

They’ll check your debt to income ratio in order to compare your current loans to the amount of income you make. That will help them see how much left over you have to afford the new monthly mortgage payment and taxes you’re asking for. Then they’ll check your savings accounts, pay stubs, credit cards and anything else they want. If you deny them anything they’ll just assume you’re hiding something and say “OK no problem, thanks anyways”.

For some reason you have to beg the bank to allow you to give them business. It’s not just a sale to make the profit and it’s over. It’s just the beginning and they need to get that mortgage payment every month for 30 years before the sale is complete and the profit is made.

Personally I don’t see how mortgage lenders are only charging 4% interest on a new mortgage and keeping the rate fixed for 30 years. I would never do that with my $150,000 if I had it, that’s for sure. They should be charging 7-8% to make it worth their time and effort. Especially when dealing with people who have a bad credit score..

There are plenty of things that you can do to increase your credit score so you should start there and take your time with buying a home. I’m sure you’re anxious and want to buy a home now but you’re not going to be able to if you’ve been denied by a few mortgage lenders already. Show them that you’re working at it by proving that you can pay a loan off on your own and then maybe they’ll give you $150,000 of theirs to buy a home.

Knowledge Will Save You Thousands
The Free Mortgage Calculator

How to Negotiate When Renting an Apartment

In this tough economy of 2011 there is a lot going on in the real estate market but rent seems to be left aside for some reason. The cost of homes are lowering by the day and their are foreclosures and short sales on top of that which are even lower in price. Banks are literally trying to give away property in some areas because holding onto them is costing money as well.

So if I bought a $150,000 2 bedroom condo 5 years ago and could rent it out for about $1,000 per month should the rent go down with the worth of the home? Who’s to say what the home is worth when you’re trying to rent it and who says what kind of rent you can actually get for it?

Simple answer: YOU!

If you use a mortgage calculator to see the mortgage payment on a $150,000 home VS a $50,000 home you’ll see that the owners expenses are a lot lower and can afford to give you a lower monthly rent. The taxes and condo fee are always lower on a cheaper home as well.

If you look at the condos for sale in your area you’ll see some amazing deals but you may not want to buy a home right now in your life so you’d like to look into renting one of these condos. That’s definitely not a bad idea but make sure you get a good deal for your apartment.

Who to rent from?

You’ll want to search online to find an apartment I’m sure, so you’ll want to avoid apartment complex’s that have a manager on staff because it’s much harder to negotiate with them. Find a condo complex that has one owner because they have the monthly mortgage payment to make each month which makes them desparate for a renter!

Usually when a home owner signs the rental agreement they ask “what’s the highest and lowest amount of rent you’ll accept“. So obviously the highest amount it’s placed on the Ad for the apartment and it’s up for negotiation. If it’s up for $1,000 and you take a look at it with the realtor then simply say, “will the owner accept $900 instead” and say it’s the best you can do.

The realtor will ask the owner and I’m sure they’ll say yes because they need the rent! Waiting 2-3 months to rent a condo when you’re the owner can cost you a lot of money so it’s worth renting out sooner for less money!

Onwer waits 3 months to get max rent of $1,000

(9 months of 12 rented) 9 x 1000 = $9,000 rent for the year

Owner rents it the first month for $900

12 x 900 = $10,800 rent for the year

Catching the right person will be the luck of the draw but you might find the perfect person. In the blog post before this one I talk about buying a condo in SC for only $35,000 which means my costs are brand new and very low. If a renter had this information before signing a lease with me then they’d want to negotiate quite a bit.

The current rent in that complex is $800 per month so I put it up for $750 right away and told the real estate agent I’d accept $700. I’m still going to be making $200 per month so I’ll probably go lower if someone offers right away.

Remember to ALWAYS negotiate! What could it hurt? You might get a “No thanks” and then you can just go back and take the original offer if you like the home that much.

Knowledge Will Save You Thousands
The Free Mortgage Calculator

I Bought A Short Sale and Closed Today!

I’m starting to live the real estate investing life that I explain to everyone else! I’m closing on my 3rd condo today and I’m going to explain the process to let everyone know how easy it can actually be for you too.

First of all, a short sale is one that the seller owes more on the mortgage than they’re selling it for. I’m buying a condo for $35,000 and the owner owed $110,000 on it so it’s a “Short Sale”. I had to negotiate a price with the seller which was accepted at $33,000 and then the bank started negotiating with me too and got it up to $35,000. However, I knew it was still a good deal because my real estate agent checked out the last 4 condos in that complex to sell and they were still all above $35,000.

It’s a 2 bedroom condo in SC and I live in NH. I had the real estate agent take pictures of the inside because he said it probably needs to be painted. Including the closing costs I’ve paid about $38,000 and plan on painting it for less than $1,000 to rent it out for about $700 per month.

So I have a power of attorney signing the papers for me today in SC. Then she’s going to send the keys to Southern State Management which is a property management group. They handle everything for me starting with hiring the painter. I signed an agreement with them already to rent out the condo at $700 per month which will cost me $300 up front and then 9% of the rent each month.

Which that money they handle all phone calls with problems, fixing the problems, writing up a legal lease agreement, collecting the money, adding late fees when needed and sending me the check each month. They’ll also take the neccessary actions to evict the tenant if they aren’t paying their rent.

So I used a mortgage calculator to see what my monthly payment would be for a $35,000 mortgage. However, you’ll need 20% for a down payment and I didn’t have anything. I got a personal loan for $10,000 which was for the $7,000 down payment and $3,000 in closing costs. My interest calculator says it’s $225 over 5 years at 13%. Then there’s $28,000 left for a mortgage over 30 years which is $170 per month.

New Monthly Bills

Personal Loan – $225
Mortgage Payment – $170
Taxes – $100
Condo Fee – $150

Total – $645
Rent – $700 – 9% = $630

So I’ll be basically breaking even month to month and buying a condo for $15 per month. I’m also paying principal which is savings and I’ll get a tax deduction at the end of the year for my taxes and interest paid on the mortgage. That’s about $140 per month in interest and $1,200 for the taxes. So a deduction of $2,880 adds about 20% of that number to your tax refund!

Buying my 4th condo!

I have my SC real estate agent looking for a good condo deal for me all the time even though it will take me a few months to buy another one. I like to keep an eye on everything going on because if another condo sells in my new complex for $30,000 if gives me a lot of information to my next purchase.

Before I bought this condo I was approved to spend $1,000 per month worth of borrowing power. That means my new personal loan, mortgage payment and taxes can’t be higher than $1,000. Now I’ve already spent $645 worth of it so how will I buy another one?

Now that I’m renting it out the rent is income! $630 per month as income but the bank only accepts 75% of that number because they figure in 5 years you’ll be out about 25% of the months total.

Total – $1,000 + 470 (630 x .75) = 1470

First Cond0 – 645
New Condo – 645

Total $1,290

That means I can get another personal loan for $10,000 for the down payment and closing costs and another mortgage for $35,000. Then I’ll rent it out and do it all over again. I’ll keep buying homes unitl the bank doesn’t let me anymore because I KNOW real estate will go up eventually. A standard 2 bedroom condo sells for over $100,000 in most areas and was selling for $150,000 in this complex 5 years ago. So I have high hopes for the area I’m buying in right now.

Then I just have to break even month to month until it goes back up to the price it was 5 years ago. I have plenty of time to wait and plan on using real estate as my retirement plan. That will probably be the best option for me.

Use my mortgage calculator to see how much you can afford each month and only look at foreclosures and short sales so that the mortgage and monthly payments stay very low. Take your time, I’ve only bought 2 now over the course of 2 years because I’m looking for the perfect deal each time and don’t want to get myself in financial trouble.

Knowledge Will Save You Thousands
The Free Mortgage Calculator

Should I Wait To Buy A Home Until Real Estate Drops Lower?

This is a funny question because people will just listen to anyone about whether real estate is still going down or if it’s coming back up. The truth is I could probably give you 10 good reasons why it’s turning around and possibly change your mind into buying a home very soon. I could also write a second article about how horrible the economy is and get you to wait another year before buying a home.

So Who’s Right? Is there even a right answer?

Let me ask you something: Is gold still going up or is it coming down? Will Google’s stock go over $600 in the next year? If you actually knew the answer to those questiong you’d probably buy them, but you don’t know the answer and neither does anyone else. Just like NO ONE knows if real estate will go up or down in the next year. They just don’t know..

However, I will discuss why I think it’s a GREAT time to buy a home whether real estate continues to drop or not. Even if you buy now, while it’s down 40%, and it goes down another 10% before making an upward move you still made a great deal. You also won’t have to try and join the massive crowd that starts to buy when things do turn around.

Gold keeps going up because people keep buying it. Right now people aren’t buying homes so owners are dropping their price lower and lower to sell it faster. Until people start buying the market will continue to lower. That’s YOU included.

If you have the time to sit around and wait for real estate to pick up again then keep a very close eye on the real estate market every day. Starting now! Look for foreclosures so that you can get a very good deal and trust me, you’ll find one. Be patient and just wait for the deal and the home that you want.

FACTS

1. Real estate on average is down over 30%
2. If you find a foreclosure you buy into a down market of 50%
3. Current interest rates are at an all time low. Fixed rate mortgage 4.75%
4. Yearly taxes are much lower due to lower values of homes
5. Owner occupied homes only need a 4% down payment  

Assume a stock was $3.00 per share and it’s down to $1.50 now and you think it’s a good buy so you buy it. Would you be mad if it went down to $1.20 before it went back up over $2.00 again?

That’s the point I’m trying to make with real estate. No ones asking the question: Will real estate ever go back up? They’re asking when? Well look at the facts above and tell me it’s not a great time to buy right now. It may go slightly lower but it will come back up in a hurry and you could miss it all together because you wanted to wait a little longer.

Right now the power is in your hands completely because you aren’t the one possibly in foreclosure or about to be if you can’t sell your home in the next month. A lot of people are in trouble and NEED to get rid of their homes. That’s where you come in and make low offers just to see what happens.

Don’t listen to your real estate agent when they say “You could insult the seller with that low offer”. WHO CARES! You have the power, not them. You can offer whatever you want and the worst they could say is “no thanks”. Do whatever you feel comfortable doing and that’s it.

Make sure you use my free mortgage calculator to help you figure out how much of a mortgage payment you can afford. I also have the current interest rates listed for the different types of loans available.

Knowledge Will Save You Thousands
The Free Mortgage Calculator

Adding Extra Mortgage Payments Rather Than Principal

Many people discuss adding principal payments to your mortgage to save interest over the years, but not many people discuss adding a mortgage payment or two.

When you make your monthly mortgage payment you’ll have a choice to add just principal or add it to your monthly payments. If you add the principal it will subtract all of the money above your mortgage payment from the balance of your principal. That means no interest will be paid.

If you decide to “pay ahead” a mortgage payment you can pay the exact amount of your mortgage payment twice which puts you a month ahead. So if you pay 2 months in January you could skip February if you want to. The idea is to pay ahead 2-3 months so that you can skip up to 3 months of your mortgage payment if you ever need to.

Sometimes people get into a jam for a month or two and need some extra cash. If you’ve paid ahead 2 months then you can skip your mortgage payment and use it towards anything else you need.

You can do this with any type of loan such as a personal loan, home equity loan or even a credit card if you want to. Even if you’re paying down principal every month I suggest skipping a couple months to add 2 extra mortgage payments. Then you can start adding principal with your extra money again.

More and more people are getting into very tough financial trouble because they live month to month. That means the smallest thing could ruin quite a bit. If you don’t have the money to pay your bills then you could lose everything you have and end up with terrible credit.

In a perfect world I’d tell you to just put 3 months worth of bills into your savings account but we all know how that works. You’ll end up taking it for a vacation or spending it on something you don’t need. If you’ve already added it to your mortgage or car payment then you’ll be in a very safe spot.

I see people spend every last dime of their monthly income on a mortgage payment and then get mad when they live month to month without any additional spending money. You know what you’re getting yourself into. Math is very easy: add up your bills, add up your income and see what the difference is! Math always works and it’s a very simple equation. If it’s not a simple equation for you then you shouldn’t be buying a home!

Knowledge Will Save You Thousands
The Free Mortgage Calculator

Should I Refinance My Mortgage? What Percent Savings Do I Need?

Refinancing your home in this 2011 economy can be a very good idea because you’ll save a lot of money over time. It’s very easy to figure out and it’s different for each financial situation.

Have a mortgage calculator handy in order to do a few calculations. You’ll need to know the amount left on your mortgage, your current interest rate and the new interest rate you are thinking about. It also helps a lot to have the amount of years you’ve been paying the mortgage because you don’t want to go back to a 30 year mortgage.

First plug in the original numbers into the mortgage interest calculator to see everything as it started. Let’s say it was $150,000 at 6% interest over 30 years and you started paying it 4 years ago. That gives you a monthly mortgage payment of $900 and a total amount of $174,000 in interest.

The current interest rates are about 4.75% right now on a 30 year mortgage and the cost of refinancing is usually about $1,500-2,000. After 4 years you have paid down $8,000 giving you a refinance amount of $142,000 at 5%.

Over 30 years – $762 – Total Interest – $132,000

That’s you’re first option if you really need to save money each month and you’re actually going to use the difference of $138 towards other bills. The other option is to keep the same $900 monthly payment and take years off of your mortgage.

Over 20 years – $940 – Total Interest – $82,000

This is a great idea if you can afford an extra $40 per month. You will have spent about $2,000 for the refinance to save $50,000 over the life of the loan. I don’t think people care about paying off their mortgage anymore because “they’ll always have the monthly payment”. I don’t believe that’s true at all.

The problem is that people keep refinancing up to another 30 year mortgage, getting a home equity loan up to the full worth of their home or upgrading to a more expensive home before they can really afford it.

Sometimes people will even refinance their home over 30 years again at $150,000 and get a check for the $8,000 balance. Usually the number would be higher than that but either way it’s a big chunk of cash that’s about to be wasted on something.

If you’re looking to refinance your home you either want to pay off your mortgage sooner, get a lower interest rate to save money per month or get that chunk of cash out to spend. My recomendation is to get the mortgage over less years and keep your monthly mortgage payment the same. You can already afford it because you have for 4 years so keep everything the same and realize how much money you’re going to save.

You should at least keep the years the same. If you paid down 4 years then get the refinance over 25 years which saves you a year and lowers your mortgage payment slightly. Then divide $2,000 (cost of refinance) by the amount of monthly savings to see how long it will take you to start making money on the refinance.

A mortgage calculator is a very useful tool that can help you with your mortgage payment. If you own a home or are thinking about buying a home then you should learn and understand interest calculators because I know you’ll save money from the knowledge you gain.

Knowledge Will Save You Thousands
The Free Mortgage Calculator

Buying a Home to Rent To Your Kids

If you have kids and they’re graduating high school then they might be going to college soon or possibly moving out and getting a job. This means they’ll have to pay room and board at their college or rent an apartment in which they’ll be spending a lot of money each month.

In this tough 2011 economy there are so many foreclosures, short sales and real estate deals out there that you could potentially make a lot of money. Wouldn’t it be great to buy an investment property and have a renter ready to move in the second you close on it?

Buying a home and renting it out to your son or daughter is the way to go. Buy a 1 bedroom condo to keep it nice and cheap and charge your son or daughter half the costs and you pay half the costs.

If you watch TV then you’ve probably see a few experts argueing about whether real estate has hit rock bottom yet or when it will start picking up again. Real estate is NOT a business or a stock. If Walmart’s stock dropped 50% most people would tell you to buy it because it’s “Walmart” and it will bounce back. However, it may not. There might be financial difficulities that you can’t see.

Real estate is NOT a business. People need homes and will always be buying homes. I can not and will not say that real estate has hit rock bottom and trust me no one else can tell you that either. I will tell you that it’s dropped far more than 50% if you get a good foreclosure, interest rates are the lowest they’ve ever been and we all know that real estate will go back up. So you could buy your 1 bedroom condo for $35,000 and watch it hit over $100,000 in the next 4-5 years.

If you buy the condo be sure to write a real lease and document the income you’re making even though it’s from your child. You’ll have to pay taxes on it because it’s income but you’ll be able to use that income in addition to your pay check the next time you apply for any type of loan.

If you have $1,500 available borrowing power to start and you bought this condo for a total of $700 per month then your borrowing power has dropped to $800 per month. If you charge your child rent your income gets increased by the amount you charge them bringing you back up to the original $1,500. Now you can do the process all over again with your 2nd child when they need to move out.

You’re also teaching them a lot about responsibility and living on their own. Take your child through EVERY step of the mortgage process. This will help them learn about buying and selling a home, getting a mortgage rather than renting an apartment and it will also build their credit score if everything is documented.

Keep the money in the family. If you don’t buy a home and just let your child rent an apartment then either $500 of theirs or $500 of yours will be going to someone else buying a home just to rent it out. This way you’re buying a cheap home with a very low interest rate and not paying rent to anyone else. If and when they decide to move out you can just rent it to someone else through a property management company.

Knowledge Will Save You Thousands
The Free Mortgage Calculator

Affording The Most Possible Home You Buy

Everyone wants to get approved for the most possible home they can possibly get but why? If you got approved from your first mortgage lender for $150,000 and then for $200,000 from the 2nd mortgage lender would you utilize every last bit of it?

Why are you living in the shoes of someone who makes more money? Are you hoping to get a bigger home to show it off to your family and friends? Who wants to live to their absolute maximum each month? All it does is stop you from doing anything else fun in your life at all.

Buying a Home for $200,000

Monthly Mortgage Payment – $1,200
Monthly Taxes – $500
Monthly Expenses $600

Total – $2,300

Buying a Home for $150,000

Monthly Mortgage Payment – $900
Monthly Taxes – $300
Monthly Expenses – $400

Total – $1,600

Using a mortgage calculator will show you the difference in the monthly amount you’re about to spend on your new home. Personally I’d rather live in a slightly smaller home in order to spend an extra $700 per month on entertainment. Even though you really like that bigger home it won’t be as fantastic a year down the road. You’ll be used to it and wish you had the extra $8,400 to spend over the last year instead.

Excluding fun, what if someone loses their job? What if your hours get cut? What if you took on too much and didn’t realize it because the 2nd mortgage lender was wrong when they decided you could afford a $200,000 home? These scenerios aren’t “ehh I think about it later” types of scenerios. They’re more like “I lost my job, lost my car and lost my house and now I’m bankrupt and have no possible credit to get anything”. So take a strong look at your finances before getting into something like that.

THEN use a mortgage calculator to figure out how much extra spending money you’d have similar to the situation I gave you at the top of this blog. Remember when looking at a bigger home there’s more taxes and more monthly expenses such as heat and electric.

If your spouse needs convincing:

If you think this is a great idea but your spouse thinks you should get the bigger home you should first explain the things I did and then get a list of things that they can buy over the next few months with the extra spending money to convince them even more.

I suggest you go to the mortgage lender to see what you can afford and we’ll call it $175,000. Then look at places for $125,000 and split the monthly savings to spend on whatever you want. Trust me, living in a bigger home might put a big smile on your face for a month but the real smiles will come at the end of each month when you’re each going on a shopping spree with $350 each.

Your husband won’t care that you spent more money on clothes or shoes and you won’t care that he bought even more video games. However, if you do buy the bigger home you’ll get into more fights each month when each of you “spends the money you don’t have”.

Both of you could save your spending for 2 months and go on a nice cruise or weekend getaway. You can go out for dinner and drinks whenever you want. Struggling to come up with your mortgage payment at the end of the month will never put a smile on your face. Complaining about the heat being too high or all the lights being on will not put a smile on your face at all.

Doing the right thing is easier when you analize it and put it all on paper. Look at the 2 situations next to each other and decide together which way you want to go. Do the same thing with both of your cars to save even more money each month. Don’t you think the most fun would be to have spending money each month rather than just a big home you can barely afford?

Knowledge Will Save You Thousands
The Free Mortgage Calculator