Many home buyers today will take a few basic steps when determining how much home they can afford. For example, if you are like most people, you may have used an online calculator to determine how large of a loan you may qualify for and what mortgage payment are affordable for your budget. While these steps can be helpful, there are additional steps you can take to further ensure that the home you have your eyes on is actually affordable for your budget.
Focus on Taxes and Insurance
You may have estimated taxes and insurance with your preliminary or general calculations, but once you have found a home that you love, you should use real numbers for these expenses in your budget. The property taxes and insurance costs can vary by home and by community, so your estimate may be hundreds of dollars off base or more.
Consider the Age and Condition of the Property
In addition to reviewing property taxes and insurance expenses, focus on the age and condition of the property. The age and condition will impact property maintenance requirements and repair needs. How old are the HVAC unit, the roof, the water heater and other functional or structural components of the home? Will they need to be replaced soon? Older homes typically require the homeowner to put more money into them, but this may not be the case if the home has recently been renovated.
Think About Your Commute
Also think about your commute to work. Each home will have a different impact on your commute, and this will impact your budget over the years in a remarkable way. Even a few miles difference between homes can add hundreds of dollars or more to your commuting expense over the course of a year. Think about toll fees, gas, wear and tear on your car and more. In addition to your commute to work, think about your commute to take the kids to school, to run to the grocery store and to complete other trips that you make on a regular basis.
Each home that you may be looking at will affect your budget in different ways. To fully gauge how significant one home’s impact may be on your budget, analyze each of these points in combination with the estimated mortgage payment. This will give you a more realistic look at the true cost associated with owning a specific home.