There's a curious situation developing among young urban professionals - some people who have extremely nice homes are actually poor! Their Toronto mortgages are so large that they find it difficult to make their car payments, pay their property taxes, buy groceries, or put clothes on their family's backs. It is a lamentable but common situation that is known as 'house poor.' Fortunately, it's completely avoidable and fixable if caught in time. To find out some ways to become house poor and how to avoid becoming house poor, read on.

Some people set themselves up to be house poor right out of the gate without even realizing it. There's a perception among your first time home buyers that they need to buy the largest, nicest Toronto condominiums for sale that they can find. That they need to buy their dream home right now. However, doing so usually sets them up for a crushing financial burden. They forget about their other expenses, like utilities, school fees, transportation, property taxes, and the rest of it and focus only on the price of the home. Soon reality comes crashing back and they're house poor.

Another way that even sensible people can become house poor is through a change in situation. They were sensible when choosing a property from the Toronto MLS condo listings, but they took out a variable mortgage and the interest rate shot up, putting their payments outside their budget. Or one of the income earners becomes injured or decides to stay home and care for children, taking away a portion of the income that they banked on when they bought the house. Suddenly it becomes a lot more difficult to meet their financial obligations.

In order to avoid becoming house poor, you need to exercise common sense at all times. Any home you can't come up with a 20% down payment for and that has mortgage payments over 30% of your income is a home you cannot afford, and if your realtor says otherwise she should not have been granted a real estate license in Ontario. You should always think carefully before choosing a variable rate mortgage, and you should budget carefully before deciding to quit your job to stay home with the kids.

Sometimes you can't predict the circumstances that have made you house poor, and that's okay. The question now becomes: what are you going to do about it? The instant you start to struggle you should go to your lender to see about mortgage refinancing in Toronto that could help relieve the burden. If that doesn't work, you'll need to consider getting a better paying job, selling your home, or downgrading your expensive home to a cheaper one.