Budget planning

Many people have assumed my partner and I make very abrupt large financial decisions and purchases. It's an entirely different story behind the scenes! Every big financial move has always taken years of planning.

With homes, it's important for us to come up with a realistic budget that takes into consideration a Plan B in case anything happened financially.  It's so easy to get misled by banks and outrageous loans they're willing to hand out that end up leaving you buried in high interest pay-backs. The claim that all you need is a 20% downpayment is very misleading! 

What's most important is being able to make that mortgage payment with all other bills taken into consideration.  Two of my favorite sites to use for predicting future loan payments and projecting pay-off dates are: 

1. www.mortgagecalculator.org/ 
2. www.bankrate.com/mortgages/calculators/mortgage-loan-payoff-calculator/ 

I use the 1st link to predict my mortgage payment and the 2nd link to predict how fast I could pay off a mortgage based on different payment plans.  Playing around with the first link tends to give me the loan range that my partner and I can comfortably work with financially. 

To understand your financial capabilities, map out ALL bills. This includes utilities, insurances, property taxes, mortgage payments, leisure expenses, etc... each month. Compare that to your income after taxes.  Banks tend to give people a false sense of security that they're okay financially when handing out loans because they calculate everything with your income before taxes.  Income before taxes is not your true take-home cash.  After getting a feel for how much your spendings are each month, playing around with the loan calculator will give you a better understanding of how much you'd have to provide as a down-payment in order to comfortably manage your mortgage.
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