Home Buying: Can You Actually Afford It?

Couple looking at new home

When it comes to buying a home, you should not only focus on whether a certain property matches up to your needs and wants. While this matters, it is much important to find out if you can actually afford to buy the house. To avoid financial difficulties in the future, it is helpful to get a sense of the true value of buying and owning the property.

Does it fit your budget?

Before searching for houses, Altius Mortgage Group and other home loan companies suggest getting a preapproval to have an idea of how much loan you can afford. If you qualify for a larger amount, it’s better to shop below the maximum figure. You can also benefit from using a home loan calculator to find out what your monthly payment would be and determine if that fits your current budget or income.

Are there HOA fees and property taxes?

Property taxes and homeowner’s association fees can increase your monthly payment. Learn more about these fees to find out if you need to account for them in your budget. It makes sense to think about how much you’ll likely pay in property taxes and other required payments before finalizing the purchase.

Will you need to budget for maintenance or repair cost?

Before deciding to buy the house or make an offer, think about the issues that you’ll take care of immediately. This is especially true if you’re buying an old home that needs some work. The cost of renovation should not outweigh the price of a house in good condition. You might want to skip a house with cracks or significant foundation issues, as it’s likely to cost you more.

What will your closing costs be?

Closing costs are usually between 2% and 5% of the purchase price. They can vary based on the type of your loan, the property you buy, and where you live. Closing costs may also include a number of fees such as appraisal fees, loan origination fees, credit report charges, title searches, and others. A loan estimate from your lender will let you know how much your closing costs will be to help you prepare for the expenses.

Buying a home is a financial commitment, so it is only important to make sure that it fits your finances. Consider the things mentioned above and work with a reliable lender to learn more about your mortgage options.