I just read an interesting article about a new way to calculate whether you can afford to buy that home. The article was written by Justin McHood. It is an interesting look at the cost of transportation and whether it should be considered as part of your expenses in a home purchase.
I think that it is an interesting article, and more home buyers should think about it. He makes the point that a $100,000 home across the street from where you work will be very different than the same $100,000 home an hour away from where you work.
I was faced with this last year when a young couple I had worked with for over two years finally found a home in their price range. They were determined to stick to a budget and finally found the house. But the house was about a forty minute drive from the husbands work and I was concerned that the cost of gas (going up at the time) would hurt them in the long run. They would not listen to anything about the cost of the gas, and went ahead and got the home. I know that they are very happy to be there and love it, and are happy with the mortgage payments they ended up with. But I am still worried about it for them. I totally understand that the decision had to be theirs.
The article by Justin McHood suggests that the mortgage and the cost of transportation together should not exceed 45% of the buyers gross income. I think this is a pretty fair assessment of good money management. With gas prices inching up again and the cost of insurance and other fees vehicle fees moving up as time goes on, transportation is getting to be a larger portion of the family budget. What do you think?
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