It’s a big question and one that plagues a lot of homebuyers, particularly first-timers. But there are several ways to determine what you can afford.
Consider your down payment. How much do you actually have to put down? Take that figure and divide it by 20%. The total is the maximum loan you will get if the bank determines that you actually qualify for it.
A mortgage calculator will help give you a rough idea of your monthly payments. The good thing about an online mortgage calculator is that it uses current interest rates and amoritization schedules. Plus you can easily compare 15 versus 30-year mortgages.
Closing costs are always a big unknown but you can tell the mortgage broker to provide you with an estimate of the closing costs even before you find the home of your dreams. This is a one-page document. Just make sure you understand every single item you are being charged for before moving forward.
Don’t forget to figure in property tax and insurance, items that can easily be determined. And, of course, there’s also the need for upgrades and furnishings once you move in. An important point to remember: In Southwest Florida, landscaping is a year-round project so take into account what landscaping currently exists and how much work you’ll need to do to for upkeep.
