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Top Mortgage Lender in Seattle Shares About Home Buying Tuesday, February 8th, 6:00 PM
How Much Can You Afford?

Seattle, United States - February 8, 2022 / Blue Square Mortgage LLC /

When you are shopping for a home, you are going to need to be realistic about the costs of homeownership. You can complete the process more rapidly and look forward to financial stability and comfort over the years ahead if you narrow down your search to only homes you can truly afford. But how do you know if a particular house is within your budget? Let’s talk about some things to consider when you are calculating whether a home is a good fit for your financial needs.

Things to Consider When Calculating 

  1. First, calculate how much home you can afford. The first thing to do is a basic computation for how much home you can afford.

This entails looking at things like:

    • Your income, including what you expect it to be over the years ahead
    • Your monthly expenses
    • Your existing debts
    • The interest rate you are likely to pay on your mortgage
    • Whether or not you need to pay for PMI or MIP
    • Your estimated monthly mortgage amount
    • Your down payment
    • Your loan term
    • Your property taxes

Blue Square Mortgage can pre-approve and pre-underwriter you for a home loan and issue a pre-approval letter. In this process we will provide you with a comprehensive estimate of your monthly mortgage costs as well as a complete closing cost estimate.  The pre-approval or pre-underwriting letter will give you an idea how much you can borrow and what interest rate you may qualify for. We can also walk you through this list during your consultation. You can then go about your home search with a pretty good idea of what will fit your budget.

  1. Estimate the cost for repairs or upgrades you will want for the home. While “how much home can I afford” calculators online walk you through the basics, there are some details that they have no way of accounting for. A couple of the easiest areas to overlook when it comes to budgeting for a home are repairs and upgrades. The home inspection should help you identify what you will need to do after you buy the home. Do some research for any necessary repairs and upgrades to try and estimate their costs. Add those in with the rest of the costs to purchase the home. Do not assume you can just put off these tasks indefinitely. Next, acknowledge that the home inspection is not going to catch everything. There are going to be some unexpected expenses that are going to crop up during the first few years. So, account for those as well as best you can. Finally, your home will continue to require maintenance and improvements throughout the time you will be living in it. Factor those in as well. Discover suggests, “According to the one percent rule, you should set aside at least one percent of your home’s value every year for home maintenance. For a $360,000 house, this works out to $3,600 per year or $300 per month.”
  1. Calculate ongoing costs for owning that home and add them in. Along with maintenance, repairs, and upgrades, there will be other costs you will need to pay on a continuous basis to own your home. For example, you may have to pay homeowners association (HOA) fees. You also will have utility costs. Plus, you may need to spend money every year to maintain your grounds.
  1. Factor in closing costs. Along with all of the costs above, you also will need to be able to cover the closing costs on your mortgage, unless the seller will be doing so. We can help you estimate your closing costs once we know what type of mortgage you will be applying for.
  1. Don’t forget to think about your preferred lifestyle. One additional consideration that a lot of first-time homebuyers, in particular, do not think about is, “How do I want to live my life?”Are you someone who is content being thrifty? Are you pretty good at entertaining yourself at low cost or no cost? If so, you might be content to put more money into a home. But if you are someone who wants to regularly go shopping or dining, or you want to take a vacation every year, you need to leave enough flexibility in your finances to make that possible. That means that you might want to reduce what you are willing to spend on a house so that you have more cash available. Try and come up with an estimated monthly cost for these types of leisure and lifestyle activities, and then subtract that from the budget you have available for home-related payments.

 

We Can Help You Calculate What You Can Afford!

Running through all the calculations you need to make to assess how much home you can afford on your own may not be easy. But we can walk you through it, asking you questions about your income and expenses to make sure that you are getting a thorough and accurate estimate as possible for your individual scenario.

Have questions about budgeting for a home in Washington, or ready to schedule a consultation? Please call us today at Blue Square Mortgage (206) 352-6453 to get started!

Contact Information:

Blue Square Mortgage LLC

4212 33rd Ave W
Seattle, WA 98199
United States

Mike Peacore
(206) 352-6453
https://www.bluesquaremortgage.com/

Original Source: https://www.bluesquaremortgage.com/how-much-can-you-afford/

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