Finding the right home is about much more than finding an attractive house with enough bedrooms for the number of people who will live there. While having enough space is definitely an important consideration during any home search process, it is equally important to make sure that the home you decide to buy will also comfortably fit your budget and help you continue to meet your family's financial goals. If you are currently searching the real estate listings for your next home or plan to do so soon, consider using the following tips to help ensure you find the one that will continue to offer you that "happily ever after" feeling long after you leave the closing table.
Base your home purchase budget on net numbers
Many of the financial calculators used by both online and traditional lenders use the mortgage applicant's gross income numbers to figure the amount of the home loan they can afford. However, gross income numbers are typically at least fifteen percent higher than the actual net income that comes into the home each payday. Families who want to make sure any home they buy will be easily affordable on their current budget should consider asking their lender to use their net income numbers, instead.
Use the total housing costs to make a final decision
Basing your optimal mortgage amount on the household net income is only the first step in making sure any home you purchase will be truly affordable. In addition, prospective home buyer's should also consider looking ahead to calculate the expected costs of owning and living in the home. Recurring costs are those that come around every month or every year and they can take a big bite out of the family budget. These costs include:
- heating and cooling
- real estate taxes
- homeowners association (HOA) fees
- insurance, including private mortgage insurance (PMI), homeowners insurance, and any other type necessary for the individual situation, such as earthquake or flood polices
- utilities, including sewer, water, trash, electricity, and gas
- other ongoing costs associated with home ownership, such as cable television, internet, and phone service
- repairs and renovations
It is important to also remember that recurring costs for utilities, taxes, insurance, and heating and cooling are likely to be significantly higher on larger homes and less expensive on smaller homes or those with a more compact design.
For even more constructive advice to help you purchase the home that will keep both your family and your budget happy throughout your ownership, take time to discuss your home buying situation and financial goals with your trusted real estate professional at a place like Norchar. Their experience will help you narrow your search and expedite your home buying process.