How to Know if You Can Really Afford Your New Mortgage

If you are thinking about buying a house, you also need to be thinking about what your mortgage payment is going to look like.

There's lots of expert advice out there about how much you can comfortably spend on a mortgage loan. Most mortgage lenders want your total housing costs to be below about 28% of your income. Some experts say you should try to keep your payments below 30% to avoid being cost-burdened, while others say 25% is the most you should spend on housing expenses.

With all these numbers thrown around, it's not surprising if you aren't really sure exactly how much you should be spending. The good news is, there's a really easy way to tell if your new mortgage is going to end up being affordable over time or not.

Do this to make sure you can afford your home loan

If you want to make sure that buying a particular home is affordable, the best way to do that is to actually practice making the payment.

Let's say, for example, that you are currently renting and your housing costs are $1,500 a month. Now, say you're considering buying a house that would come with a monthly mortgage payment of $1,900 a month including principal, interest, property taxes, and homeowners insurance (all the big expenses you'll be stuck paying as a homeowner).

In this example, you'd be spending $400 a month more on your housing once you purchased your house. So, to see if this is affordable or not, start "making those payments" and do so for around three to six months. Of course, you aren't going to actually be sending the payments to a mortgage lender. Instead, when you pay your rent each month, force yourself to put an extra $400 into a high-yield savings account and don't touch the money.

Why is making these practice payments a good idea?

Forcing yourself to actually make your new mortgage payment every month before you commit to it is the single best way to ensure that your new home purchase actually will be affordable and that you won't end up regretting making the choice to buy (and increase your costs).

If you actually have to live on what's left over for months, you'll get a good idea of just how doable this is. If you don't even notice the extra $400 is gone and can still keep doing everything you want and need to do -- like saving for retirement and paying for food and clothes and kids' field trips without breaking out the credit cards, then you should be good to move forward with the home purchase.

But if you find that you really miss the money and you're struggling, you'll know that you need to re-evaluate whether you can afford those higher monthly mortgage costs. You can decide to buy a cheaper home or save more before moving forward and becoming a homeowner so you won't end up overcommitting yourself to a mortgage that would be hard to pay for years to come.

If you're planning on buying a home any time soon, figure out today how much it's going to cost you and start making your practice payments. The sooner you begin doing this, the sooner you'll be able to make an informed choice about whether to move forward. Plus, that extra money you're putting in savings can help you to pad your down payment or cover your moving costs so if you find out you're ready to move forward, you'll have a little extra cash to do it with.