I’m sure you have asked the question- “when should I buy a home?” at least once and  have gotten various amounts of answers- well, here is one more data backed answer I’d like to add to that pile!

So, when should you buy a home?

When you know you can afford it-  by “afford” - I mean, you must consider the following four: 

• the down payment

• monthly payment

• closing costs 

• move-in costs

I'm sure your next question will be- What do these payments & costs consist of?

Let's get into it. 

To start off- A down payment on a house is the cash that the buyer pays upfront in a real estate transaction.  Down payments are typically a percentage of the purchase price and can range from as little as 3% to as much as 20% for a property being used as a primary residence..

For example, if you purchase a $200,000 home, a 20% down payment would be $40,000. 

Next we have monthly payments- The monthly payment is the amount paid per month to pay off the loan in the time period of the loan. ​​The amount you pay every month depends on the terms of your mortgage loan-  This includes the principal (the actual balance on the loan) and the interest (a percentage of the principal—the amount of the loan you have left to repay) on the loan.

Let’s go back to the example of a $200,000 house with a 20% down payment of your own money ($40,000), and you borrow the rest. That means, your starting principal balance is $160,000 and you agree to pay it back within a 15-year term with a 4% fixed interest rate. That would mean you’d pay a $533 on your first month’s mortgage payment. The total interest cost is over $53,000. This means you’ll pay $253,000 (including your down payment) by the time everything is said and done and your house is paid off. That would make your monthly mortgage payment $1,184 each month.

Then we have closing costs, According to Bankrate- Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .”

Your closing costs are basically a collection of fees and payments involved with your transaction.

According to Freddie Mac, while they can vary by location and situation, closing costs typically include:

• Government recording costs

• Appraisal fees

• Credit report fees

• Lender origination fees

• Title services

• Tax service fees

• Survey fees

• Attorney fees

• Underwriting Fees

Last but not least, we have move in costs (which are often overlooked)- because after all, you’ve got your new home and you want to make it your own. These are the costs of any upgrades, furniture, appliances & so on. 

Factoring all of these things along with working with a team of Real Estate Professionals will keep you confident throughout the buying process! In that case- let's connect & get you started on your very own Roadmap to Homeownership!