Owning a house comes at a cost, and even if you pay all the money, you still have other things to do to keep your home safe and in good shape. If you need to take a mortgage to finance the purchase, you need to know that this is an additional monthly expense you have to cover. Dowen estate agents can help you get a mortgage for your house. However, how do you decide how much mortgage you can afford to pay? The following are monthly expenses that can help determine how much mortgage you can pay.
You will need homeowner’s insurance if you want a mortgage. The work of the insurance is to protect your house against theft and fire. However, this insurance does not cover things like food damage. Therefore, when considering a mortgage, remember you will also have insurance to pay.
Utility bills can put a dent in your pocket. You have to pay for the electricity, water, and gas you use. A good way of reducing the bills is by using environmental measures of conservation like using LED lights, using blinds, and insulating your home. This will help lower the bills and increase your ability to pay the mortgage.
Private Mortgage Insurance
If you paid a down payment of less than 20% of the price, you may have to take a PMI. This type of insurance protects you in case you default on the loan. The lender cannot take the house, and you can pay what you can afford. So, keep this in mind when deciding how much mortgage you can afford.
This will depend on the area you live in. you may be required to pay property taxes to fund the public hospitals, schools, fire departments, sewage systems, and churches in the community. You need to call the property assessors in your county to be sure of the amount of tax you should pay. So, know the number before you take the mortgage.
Your home needs maintenance to keep it in good shape. Therefore, you need to set aside some money for maintenance services. Some of these expenses are unplanned, and you must be prepared at all times. Maintenance expenses will impact the amount of mortgage you can pay every month. The lender will tell you the mortgage you are eligible for, but they cannot tell you how much you can afford. It is up to you to decide depending on the expenses such as maintenance.
Homeowner’s Association Fees
If you live within a community or a subdivision, you may pay a monthly fee for upkeep. The fee may also be paid yearly to ensure the area stays clean and well-maintained. So, know the number of monthly fees you need to pay.
Other monthly expenses that may affect the mortgage include medical bills, loans, school tuition, entertainment, clothing, food, vacations, and more.
The Bottom Line
Preparing a checklist of your monthly expenses will help know the mortgage you can afford. Remember, this list, together with the associated paperwork, is necessary for your mortgage pre-approval. The list will also help you to buy the house you can afford.