How much home you can afford
 
Determining How Much House You Can Afford; Knowledge is Power!

Before the house hunting process can begin, you need to know the price range you are going to be searching in. But even before you go through the pre-approval process with a mortgage lender, you need to be knowledgeable of not just what your monthly mortgage payment will be after your down payment, but the other home ownership expenses as well.  In other words, determining how much house you can afford is more than just the cost of the home broken down into monthly payments.
 
Parts to a Mortgage Payment
•    Principle – the amount borrowed or still owed on a loan
•    Interest – the fee charged to borrow the money
•    Taxes – Property taxes
•    Homeowners insurance – generally included
•    PMI (Private Mortgage Insurance) – if you put less than 20% down
 
Once you know what your monthly mortgage payment will be, you can then figure in the additional housing expenses to determine how much home you can afford, regardless of what you are pre-approved for.
 
Note: Most lenders say it is an affordable estimate to put 25% of your take-home income towards your home payment.
 
Additional Housing Expenses to Consider
•    UTILITIES – electric, heating & cooling, phone, internet, television, water, sewer, trash removal
•    CREDIT CARD PAYMENTS
•    AUTO PAYMENT & AUTO INSURANCE
•    OTHER TYPES OF INSURANCE
•    MAINTENANCE, REPAIRS AND UPGRADES
•    SCHOOL LOAN PAYMENT
•    OTHER TAXES
•    HOA FEES IF APPLICABLE
•    FOOD & ENTERTAINMENT
 
Once you have an estimated total of your living expenses, you will have the power to make a well informed home buying decision!
 
In short, you must factor in all monthly monetary obligations to know how much home you can actually, and comfortably, afford. Being approved for one number doesn’t mean that is the price range you should be house hunting in.
 
Learn about the cost of buying a home in Central Florida.