If you are in a temporary situation, renting may be an optimal choice when you need accommodation. But anyone who deals with homeowners and the less positive aspects of renting may be wondering when is a good time to buy a home.
Buying a home is a complicated process and a life changing decision that you shouldn’t take lightly considering the average mortgage is 30 years. If you already own a house and want to upgrade it, you need to know how much yours is worth. Tap or click here to find out the real value of your home for free.
Whatever the situation, when you’re ready to buy a new home, you need to know how much you can afford to spend. Stop worrying and use this free online calculator to find out how much you can afford to buy a home.
What goes into the cost of a house?
It’s easy to go through Zillow and see a $ 250,000 house and think, hey, I can probably afford that. You may be able to afford it, but the price listed is never the actual price of a house. Dozens of other factors and costs are added to the list price, and they can add up.
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You didn’t think the bank was going to let you borrow all that money for free, did you? In addition to finding a very generous benefactor, you will need to take out a loan to buy the house of your dreams. This means that you will have to pay interest on the amount you borrow.
Depending on the life of the loan, the amount you put in and the interest rate, you could pay double the cost of the house in the long run. It also affects your monthly payment.
If you’ve ever heard that avocados are expensive, you don’t know the true meaning of this claim until you buy a house. Closing costs come with every sale, and they typically range from 2% to 5% of the overall price of the house. A portion of the closing costs go to the attorneys who help facilitate the transaction, and they don’t come cheap.
Another sneaky hidden charge associated with buying a home is property tax. This is also on top of your monthly payment and can vary widely depending on where you buy a home, as each city determines its tax rate.
The online mortgage calculator
If all of this information sounds complicated, there is an online tool to make it simple. The Penny Hoarder uses details such as insurance, PMI, and loan term to help determine your monthly mortgage amount.
The calculator gives you information on how much of your salary should be allocated to a mortgage. Spoiler alert: it’s 25%.
This free tool uses your monthly take-home pay, loan amount and terms, amount you have available for a down payment, and hidden costs to determine how much you can afford. Check it out, so you know before you make that life changing purchase.