My New Mortgage Payment Is Higher Than My Old One. Here's How I Made Sure I Was Ready For It

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Last year, I bought a home at a very inconvenient time. Mortgage rates were not quite at a record high when I bought, but they were a whole lot higher than they've been during most of my adult life. And the area where I wanted to buy a house had a very limited stock of homes available, so I had to pay more than I really wanted to for the property.

Since I was getting an expensive loan and an expensive property, I knew my housing payment was going to be higher than the home loans I'd had in the past. I wanted to make sure I wouldn't come to regret this, so I did something very important to make sure I was ready for it.

I made sure I wasn't making a big financial mistake with my home purchase

On paper, my house seemed affordable even with the higher-than-desired price tag and mortgage rates, since my housing costs would still be below 30% of our household income. But I know that just because the math works on paper doesn't always mean that it's going to work in reality.

After all, I have a lot of other financial goals besides just paying for my house. I want to put money in my brokerage account to save for my future, and I have two small kids who have futures to save for as well. I also enjoy traveling and dining out with my family. I didn't want to have to make drastic lifestyle changes to buy the house, nor did I want to slash my savings rate.

So, to make sure I wouldn't have to do those things, I did a test run of making my new mortgage payment. For five months before moving forward with making an offer and looking into actually applying for a home loan, I paid the difference between my current mortgage payment and my expected future payment into a savings account.

Here's how this works: Let's say your current mortgage is $1,000 but your new one will be $1,500. In this scenario, you'd pay your current mortgage as usual but put the extra $500 into savings. This is what I did, for months, before actually getting the process of buying the new house underway.

There's a very good reason why this is so important

Doing a test run like this is really important because it's easy to sacrifice to pay extra for a mortgage when it's all theoretical. After all, if you fall in love with a house, you might think you'll be OK with reducing your budget elsewhere to pay for it even if it's more than you are currently paying (or perhaps even if it's more than you'd hoped to pay).

But thinking that financial sacrifices are doable is different from actually making them. And the best way to be sure you won't come to regret a new obligation is to try living on the reduced budget that this commitment would leave you with. In theory, I'd have liked to do my practice run for even longer, but I ran out of time when I found the perfect house -- and after five months, I was reasonably confident that my life wouldn't have to change in undesirable ways to make payments to my mortgage lender.

You can do this with any big commitment, whether it's a house or a car loan. And you should. You don't want to find out after you've agreed to a 30-year mortgage that the new budget you'd be living on isn't sustainable. By then, it will be too late.

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