Philadelphia Weekly

REAL ESTATE

Do the math on a real estate purchase

Mood of the Market

By Inman News Feed

Add Comment | Comments: 1 | Posted Jan. 24, 2011

Specifically, get clear on: your personal income and expenses on a monthly basis and how you see them changing (increasing or decreasing) over time, and when.
Specifically, understand what you can afford to spend monthly on housing and housing-related expenses.
Specifically, do the math on exactly how much cash you can afford to put into the deal, total.
Specifically, tell your mortgage professional and real estate representative what you can afford in terms of down payment and closing costs (one number) and monthly payment (another number) -- and then ask them to tell you what that translates to in terms of a maximum purchase price for your home.

Unless you are in the very rare position of being able to reliably predict a quantifiable increase in your income over time, get a mortgage that has payments that will stay constant over time -- today's market is just too volatile and unpredictable to plan for appreciation to power your ability to refinance in any short-term time frame.

And then come back next week, when we'll cover the next to last of my moral imperatives for resetting your approach to real estate.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.