How Much House Payment Can I Afford For Home Buyers

This BLOG On How Much House Payment Can I Afford For Home Buyers Was UPDATED On July 23, 2017

When home buyers decide purchase a new home, the mortgage payment is not the only monthly housing expenses.

  • Home Buyers need to consider their overall housing expenses when deciding to purchase a home. 
  • Besides principal and interest mortgage payment, potential homeowners need to consider other housing expenses such as mortgage insurance, property taxes and homeowners insurance. 
  • A higher priced home means higher utilities, higher property taxes, higher homeowners insurance, and higher mortgage insurance premium. 

New Housing Expenses For New Homeowner

A potential home buyer should think things through and realize that a large home will require a larger budget for housing expenses.

  • A larger home will cost more in housing expenses. 
  • It will cost more to heat the home in the winter and cool the home in the summer. 
  • It will cost homeowners more to furnish the home as well.
  • As a homeowner, maintenance such as repairs and landscaping is the responsibilities of the homeowner.

Property Taxes

One of the most important factor home buyers should pay attention to when buying a new home is the property taxes.

  • Property taxes needs to be paid whether or not the homeowner has a mortgage or not.
  • Even when if the mortgage loan is paid off in full, property taxes will need to be paid. 
  • Property taxes range from just a few hundred per year to thousands per year. 
  • In the mid 90’s, the City of Chicago increase property taxes by double digits year after year that hundreds, if not thousands.
  • The out of control increase of property taxes hurt homeowners with fixed income and no mortgage balance on their homes.
  • These homeowners were forced to sell and move elsewhere because they could no longer afford their property taxes.

Consider Homeowners Insurance And Property Taxes

Senior Home Buyers planning on buying a home that intend on staying for a long time and plan on retiring and not moving, they need to consider the property taxes when buying a home.

  • Remember that property taxes are not a fixed annual expense and can easily increase year after year. 
  • Some homeowner’s monthly property tax escrows can be higher than their principal and interest mortgage payments.

Too Much House?

Beginning in the mid 90’s to the mid 2000’s McMansions were extremely popular and living large was the thing to do.

  • Everyone in the neighborhood tried to have bigger homes. 
  • Then the 2008 real estate and banking meltdown happened and foreclosures and bankruptcies have soared to historical levels. 
  • Now consumers have gotten wiser and  are cautious in buying too much house. 
  • A larger home will cost more in housing expenses than a smaller home in all aspects from monthly mortgage payments, to expenses, to maintenance.

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