I am a planner. I love lists, schedules, itineraries, and most of all... spreadsheets. So when Greg and I decided we wanted to buy a house, of course the first thing I did was set up all kinds of spreadsheets. I made one to track all of the houses we visited, listing things like address, school district, price, amenities, distance from work, etc. I made a list of our "must-haves" and "would-like-to-haves" and "definitely-don't-want-to-haves" for the house. And most importantly, I set up a spreadsheet to figure out what we could afford. I have shared it with many friends and co-workers who are house shopping, so I figured I would share it with you guys too. I realize this is a little late for many of you who have recently bought houses, but I know people often find our blogs when looking for information on RH, so maybe it will be helpful to those who are still in the searching phase.
When we first started house hunting, we met with a realtor who took all of our income and debt information and told us how much we could afford. It was wayyyyy more than we were comfortable with. I'm not sure how they come up with those figures, but I highly suggest doing some calculations of your own before committing to anything. That's where my spreadsheet comes in!
Click on this link to download and save the spreadsheet for your own use. A preview is shown below. There are two tabs, one is a hypothetical sample and the other is a blank worksheet. You should only fill in the blue cells, and the rest will calculate automatically. In the example shown below, a family that makes a total net salary of $82,000 per year and has enough savings to put 20% down, with the approximate monthly expenses shown, can afford a $300,000 house and still save about $1,000 per month. It's important to note that this is based on NET salary... so it's what you take home AFTER taxes, 401K contributions, flexible spending deductions, etc. If you get paid every other week, just multiply your bi-weekly paycheck by 26 to get your annual net salary. It's also very important to make sure your expenses are accurate and that you adjust any house-related estimates for your new potential home. For instance, Greg and I were living in a 1,500 sf townhouse before. We knew we wanted a 4 bedroom single family home, so our gas and electric bills would be much higher than they were in the townhouse. Our monthly gasoline budget increased too, since my commute would be much longer. Property taxes are a huge component as well. Most real estate websites like Realtor.com provide a house's tax history, which will give you a good idea of what to expect.
Obviously you can customize this for your own different expenses/income, but hopefully it will be a good starting point. When I bought my first condo in 2008, I actually kept track of my budget for 6 months before I started looking so I REALLY knew how much I was spending. I tracked everything down to a $1 cup of coffee. You'd be surprised the silly things you spend money on without even thinking. In this era of online banking it's so easy to keep a budget. I used our credit card and bank statements to figure out our spending to budget for this house.
In other news, I have finished painting the study and, thanks to yet another snow day yesterday, I primed the base cabinets for our built-ins too! I picked up the curtains and rug I ordered from Crate and Barrel, but I'm not sure if I'm loving the rug. I'll upload some pictures this weekend to get your opinions. I think I need to create an Olioboard for this room too... my ideas are kind of all over the place right now.
**Disclaimer: I am not a financial advisor or realtor or anyone qualified to give mortgage advice. This is a personal spreadsheet I am sharing, but I make no guarantees as to its accuracy. You should consult with a professional before making any decisions.**