Try Before You Buy: Practice Making Your Mortgage Payments
Seeing those dollars on a screen is one thing; but actually shelling out for them every month on a mortgage bill? That’s a whole other ball game. If you’re considering buying a home, there’s an unconventional yet powerful strategy to prepare for the financial shift: practice making your mortgage payments.
Practicing your mortgage payments is like training for a marathon—it’s all about preparation. By simulating this major financial commitment, you’ll step into homeownership with confidence and clarity!
Why Practice Matters
Buying a home often comes with a significant jump in monthly expenses compared to renting or even a current mortgage. Between the principal, interest, property taxes, homeowner’s insurance, and possibly private mortgage insurance (PMI), the total monthly cost might surprise you.
Practicing these payments in advance helps you gauge whether your budget can truly accommodate the higher expense—before you’re locked in. It’s also a great way to gauge what you feel comfortable with.
How to Practice Making Your Mortgage Payments
- Calculate Your Future Payment: Use a mortgage calculator to estimate what your monthly payment would be based on the price range of homes you’re considering. Don’t forget to include property taxes, insurance, HOA fees (if applicable), and PMI if your down payment is less than 20%. I like this app for estimating payments & fees.
- Compare With Current Payments: Subtract your current rent or mortgage from the estimated payment. The difference is the amount you’ll need to start “practicing” by saving each month.
- Set Up a Dedicated Account: Open a separate high yield savings account and deposit the extra amount into it monthly. This not only simulates the habit of paying more but also builds up a financial cushion for future expenses like closing costs, moving expenses, or unexpected home repairs. You can even use this additional money to go towards your down payment.
- Monitor Your Budget: Pay attention to how this new expense impacts your day-to-day finances. Are you stretching your budget too thin? Are there areas where you’re cutting back? This exercise will highlight whether your financial plan is sustainable.
When to Reevaluate
If you find that adding the “practice” mortgage payment causes strain, it’s a signal to reconsider:
- Price Range: Look at homes in a lower price bracket.
- Location: Different areas have varying property tax rates and insurance costs.
- Home Size: A smaller home might reduce costs significantly.
This insight can save you from overcommitting financially or buying a home that doesn’t align with your long-term goals.
The Psychological Benefit
Beyond the numbers, practicing payments helps you adjust mentally to a higher monthly obligation. It shifts your mindset and builds confidence in your ability to manage homeownership expenses.
Need Guidance?
Home budgeting can be complex, especially when factoring in long-term goals and unforeseen costs. That’s why I cover this topic in depth during my buyer consult meetings. Have questions or want to dive deeper? Let’s chat!
