36% of homeowners found themselves in credit card debt due to housing expenses. This 1st shot can help you avoid this fate


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Before you buy a home, be prepared to deal with higher housing costs and unplanned repairs.

Owning a home can be expensive – maybe more expensive than most buyers realize. Indeed, in a recent ConsumerAffairs Report, 54% of homeowners say their housing expenses are their biggest financial burden. And 40% say their housing expenses are more than they can comfortably afford.

So it’s no wonder that 36% of homeowners have had to rack up credit card debt at some point due to housing expenses. This rises to 44% among homeowners who consider themselves ‘housing poor’ – meaning they spend so much on housing that they have little left on other bills.

If you are looking to buy a home, it is important to not Put yourself in a position where you may be forced to accumulate a credit card balance just to meet your expenses. Credit card debt can be extremely costly and can also cause significant damage to your credit score if you accumulate too much.

In fact, if you’re thinking about buying a home, there is one step you can take to lower your chances of ending up with credit card debt – and hurt your finances as a result.

Go prepared

Owning a home could mean dealing with unpredictable expenses, like rising property tax bills and sudden repairs. This is why it is essential to gain access to property with a fully loaded emergency fund.

Typically, your emergency fund should contain enough money to cover three to six months of essential expenses. If you save that amount, it should help pay for sudden home repairs and other housing expenses that you may not have originally planned for. Or, you can create an emergency fund for general expenses and then maintain a separate emergency account for household expenses. The choice is yours, but the key is to have that cash on hand in case you need it.

Don’t take too much home

Another great way to avoid credit card debt during homeownership is to spend more wisely on a home. If you can afford a $ 250,000 mortgage, consider sticking to a $ 200,000 loan so you have more wiggle room in your budget for all of your housing expenses, including those that may be. difficult to anticipate, such as sudden repairs.

If you’re not sure how much of a mortgage you can easily use, use a mortgage calculator to calculate a few numbers. Keep in mind that your emergency fund shouldn’t be there to pay off your mortgage on its own, because your paycheck can’t cover it. On the contrary, this money in savings should be there for unexpected costs related to home ownership. If you are thinking of signing a mortgage that you are not sure your paycheck can cover, then you better wait to buy.

In fact, as a rule of thumb, your predictable monthly housing costs, including your mortgage payment, property taxes, and insurance, shouldn’t exceed 30% of your take-home pay. If you’re planning on going over that threshold, it’s a sign that you may be taking too much home.

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