Can I afford my house?

Fall is often a great time to shop for a home. New home and condo builders are anxious to clear inventory and other sellers don’t want to hit the winter real estate doldrums with a home that has been listed for months.

With the recession entering into history (if you believe the oft wrong finance chief Jim Flaherty), you might be thinking now’s the time to strike.

Usually, I recommend doing window shopping before making major purchases. Not with home buying. There’s way too much emotion compounded by real estate agents who are skilled at instilling a sense of urgency – “I expect an offer soon. The house across the road sold after a bidding war.” The minute you start looking, you’ll want to start buying

Instead, start a house hunt with a Can I Afford My Home budget. If you have mortgage pre-approval you know the interest rate and can work out payments. Don’t forget the land transfer tax. Go to www.realtor.ca and use the mortgage and tax calculators for properties in your price range. Add in legal costs and required insurance if you have a high ratio mortgage.

You have your expected mortgage payment, next move on to your monthly housing nut. This includes condo fees, parking, property tax and insurance. A call to your current agent can get you a rough insurance figure and a search of MLS listings in the area will do the same for taxes.

Estimate utilities -- many people forget this if they have been renters. You should also count on spending a certain amount on maintenance, repairs and decorating.

You’re thinking, “Hey! It’s new I don’t need to decorate.” Does a new home buyer exist who doesn’t want to change a few things? And if it is a re-sale there’s always something that needs attention.

Now you have your monthly figure, ask yourself, can I afford it? If yes, go home shopping. If no, adjust your price point.