Take A New Mortgage Payment For A Test Drive

Do you have a client that is considering buying a more expensive home than they currently have, but concerns over increasing their expenses are keeping them from taking action? With daily messages in the news about uncertainty in the ecomony and the housing market it’s understandable to be worried. If buyers get in over their heads it may not be easy to simply turn around and sell the property for what they paid.

To help conflicted home shoppers in this situation suggest they take their new mortgage payment for a test drive before making an offer. Work with them to calculate what the increase in expenses is likely to be taking the principal and interest for a 30 year home loan, insurance, escrows, taxes, and HOA dues into account. Estimate how spending more on utilities, commuting, or other expenses might make the budget rise as applicable. Then have your clients set up an auto draft with their bank that removes this amount from their checking account and deposits it into a savings account on the same day that they pay their current mortgage or rent. They could also simply make a deposit if they’d prefer not to have it happen automatically.

After living with the new expenses for a month or two the potential buyers should have a good idea about whether it is manageable or not, and may be ready to make an offer, or start looking at homes for sale in a different price range. Plus they will have built up some extra savings which can be used as a moving fund when it comes time to head to their new home.