Before you get emotionally attached to a beautiful house, check your monthly budget to determine how much house you can afford. You need to leave room in your budget for other things, so make sure your monthly housing costs (including HOA fees (if applicable), utilities, taxes, insurance, home warranty, etc.) are roughly 25% of your monthly take-home pay. There are numerous mortgage calculators out there, but none will be nearly as accurate in capturing all housing costs involved as resources real estate professionals and lenders have access to.
If you'd like to run specific numbers, you can contact me at any point (via phone, text, or email) to quickly get a full picture of what your monthly housing costs would be. Keep in mind that mortgage calculators will not typically capture the full picture of what your monthly housing costs will be (typically HOA fees, utilities, and smaller monthly items aren't factored in).
Understanding Additional Monthly Housing Costs
- HOA fees - An HOA (Homeowners Association) is an organization in a subdivision, planned community or condominium that makes and enforces rules for the properties and their residents. Those who purchase property within an HOA's jurisdiction automatically become members and are required to pay dues, known as HOA fees.
- Utilities - These include (but aren't limited to) your electricity, natural gas, water, garbage pickup and sewer service.
- Taxes - Collected property taxes are used by the governing body of the jurisdiction where the property is located. This money funds education, road and highway construction, public servants, and other services that benefit the community. Property tax rates vary by jurisdiction.
- Insurance - Standard homeowners' insurance safeguards your home from a multitude of hazards, including wind damage, fire, vandalism, tornadoes, hurricanes, and thunderstorms. Homeowners' insurance may be required when securing a mortgage to protect the mortgage company when making a financial investment in your home.
- Home Warranty - A home warranty is a one-year service contract that covers repairs and replacements of most major home appliances and system components due to failure, standard usage, and other problems that happen due to age. Although never a requirement to have, a home warranty may be a great option to obtain to protect you from having to pay large expenses if a system/appliance breaks down.
Tip #6 covers Saving for a Down Payment and Closing Costs! As always, feel free to reach out to me at any point if you have questions about any of the content covered here.
