The emphasis in American society today is to own your own home and be self sufficient as soon as possible. Recent graduates are expected to support themselves in expensive areas like Bloor West Village in Toronto or Stamford, Connecticut. But is this the wisest move for their futures? TV shows like "Till Debt Do Us Part" show us the dangers of overreaching ourselves financially. Therefore it behooves you to make sure you are ready to buy before you do so. Here are some questions you should ask yourself.

How Much Do I Know About Money?

Those with more esoteric areas of expertise, like English Literature or Psychology, can be woefully unprepared for the process of financing a large purchase like a house. If terms like "interest" and "amortization" sail over your head, don't rush into buying Brampton real estate or a Stamford condo. Talk to a more knowledgeable relative or a financial professional for advice. People won't look down on you. They'll respect you for knowing your own limitations.

Can I Afford a Down Payment?

If you do have a modicum of financial knowledge, get out your bank statements because it's time to find out how much of a down payment you can afford. Ideally, it should be 20% or more of the purchase price of the property. Some Stamford home buyers can get this 20% chunk from the sale of their old Mississauga Condominium but if you're a first time buyer you'll need to save from scratch. While many lenders will give you a mortgage with a down payment of as little as 5%, these mortgages have very high insurance and interest rates. Keep in mind also that you shouldn't spend your entire savings - make sure to have enough to pay your expenses for at least three months in case of emergency.

What Are My Other Financial Commitments?

While you have your bank statements out, compile a list of all your other monthly payments. This includes student loan payments from when you went to college and lived in Oakville homes, movie club membership dues, your grocery bills, your cable/phone/internet package, power, water, heat, gas for your car, car insurance payments, credit card debts - in short, everything.

How Large of a Mortgage Can I Handle?

Take all of the above and subtract it all from your monthly income. Now, how much is left over for mortgage payments? This is a useful method if you live in Kingston and are buying Kingston, Ontario resale homes. However, if you're moving cities, many of your expenses will change. In this case, an alternative method you can use it to go by the rule that you shouldn't spend more than 30% of your monthly income on mortgage payments.