When it Comes to Your Mortgage, are You in Over Your Head?
We all have choices that we have to make sometimes in life. Should we go on that trip, or save our money and pay down our debt? Should we go back to school, or keep working for that promotion at our job? Can we afford to keep our house, or should we sell it? And if you’ve found that paying your mortgage is getting tougher and tougher, this latter question may be the biggest one hanging over your head. If you can’t decide whether to sell, or hang on just a bit longer, here are five signs that will help you decide whether you’re in over your head.
Nothing to spare
If you find at the end of every month that you don’t have a dime to spare, you’re in over your head with your mortgage payments. In addition to having money for living expenses, you should also have some extra at the end of every week or month to save for retirement or to pay down debt, or to invest in your RRSP. If you’re totally strapped for cash at the end of every month, you probably can’t afford your mortgage payments.
Affordable now, not in the future
A home, and especially paying for a home, is something you have to think about in present and future tense. While you may have money left at the end of each month now, what about when the kids go off to college or you enter retirement? While you might be enjoying that sprawling palace now, will you still in the future? When you may not really need it, and may not be able to afford it? This one isn’t just about your mortgage payments; it’s about maintenance repairs and property taxes too.
Death by taxation
And speaking of those property taxes, what are those in your neighbourhood doing? Is the community going through gentrification, land use conversion, or some other revamping that is going to have an effect on your property taxes? All of these and more will definitely have an impact, so make sure you take that into consideration when asking yourself whether or not you can still afford your mortgage payments.
Time to repair or replace
Sometimes homes start falling apart, and sometimes it’s not even the homeowner’s choice whether or not they want to make the repairs. Of course if your roof is falling in over your head, you don’t have a choice. But in certain mixed income condo developments, those with a little more cash can actually force lower-income owners to make repairs that they simply can’t afford. If your repair bill is getting to be too much to manage, it’s unfortunately time to sell your home.
Whether you lose your job, head into retirement, or your spouse loses their income, these are major impacts that will affect your ability to pay your mortgage every month. If your household sees a major drop in income, this is often one of the biggest signs that it’s time to sell.