Home's Price Is Only One Part of Mortgage Payment Puzzle

This week guest blogger Barbara Van Duyn, a mortgage planning specialist with First Priority Financial, talks about mortgage payments and where they fit in your overall short- and long-term financial goals. If you have any mortgage questions, you can reach her directly at Barbara@VanDuynGroup.com. 

One of the most popular questions that home buyers ask real estate and mortgage professionals is “How much home can I afford.” It’s a normal question to ask, but it’s not the most effective way to plan your finances. Banks will almost always approve you for a home loan in excess of your household budget. The more appropriate question is:  “How much do I want to spend on housing each month.” By focusing on a home’s payment instead of its price, home buyers take more control over their short and long-term financial goals. List price is only one piece of the monthly payment puzzle. The cost of owning a home month-after-month is the sum of multiple expenses:

1. The mortgage payment
2. The real estate taxes on the property
3. The cost of homeowner’s insurance
4. The cost of mortgage insurance (if applicable)
5. The cost of HOA dues (if applicable)   

Mortgage insurance and home owners association dues don’t apply to all properties so make sure you understand which costs are associated with the homes you are considering. It will make a big difference in your monthly housing cost. Allow enough cash flow in your budget, after housing costs, to comfortably cover your other monthly responsibilities and have room for life’s unexpected emergencies. All the Best! Barbara