You know more than you think you do, Wesley. Your instincts are correct: Don’t just look at the mortgage payments.
Too many first-time homeowners stretch and buy bigger homes than they need right now because they think they can afford it, it’ll be a good investment, and their family will eventually grow into it. Meanwhile, they haven’t calculated what it costs to heat and cool the place, how much maintenance will be each year (especially if it’s not a new home), and other fees like a homeowner association, insurance, even lawn care.
You, on the other hand, are aiming at a modest townhouse, and you’re deeply concerned (“freaking out”) about cost. That’s actually a good thing, because it also means you have very little debt. In your letter, which I edited for length, you indicated you have $12,000 in student loans, a $1,000 balance on your credit cards, and a car payment of $324 a month.
How does that affect your ability to buy a townhouse at a good price with a reasonable mortgage? The best way to find out for sure isn’t online. I suggest you call Debt.com at 1-800-810-0989 for a free debt analysis from one of our trained counselors. Then you’ll know if those debts are hurting you, how to get rid of them, and how much you can comfortably spend. Good luck, Wesley.
Have a debt question?
Email your question to firstname.lastname@example.org and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.