Determining how much home you can afford in MA is a good preliminary step for all home buyers and should be completed before visiting listings. This saves time and minimizes heartbreak. There are several financial figures to evaluate including mortgage payments, taxes, hazard insurance, fees, and ongoing maintenance.
Loan Payments
Loan Payments may be fixed for the entire mortgage term or may change at set time frames. This is based on your particular loan program. Typically, recurring payments include funds towards the principal balance and interest. It therefore relates to your exact interest rate, which is not usually set until you are under contract to buy a home. Your loan officer can produce an estimate using the current interest rate and a purchase value, but know that these calculations are not exact since each home will vary.
Municipal Taxes
Most lenders will mandate that you contribute to an escrow account for recurring property insurance. The mortgage company then makes the payments from that escrow account directly to the city or town. This is their method of ensuring that you maintain enough funds to cover taxes due and that payments are not delayed. Tax amounts differ depending on the area and assessment amounts. Larger properties or those with more land normally result in more taxes. Assessments can also adjust each year.
Property Insurance
Property insurance is another cost which may require the escrow of money. Premiums are due yearly and may be increased by your provider. You have the ability to switch your insurance company, although certain provisions will be necessary to comply with your loan terms.
Other Budget Considerations
There are other routine expenses that you must think about. If your loan to value ratio is greater than 80 percent, mortgage insurance may be included in your mortgage payment until your principal is paid down to a certain level. Real estate in certain communities or condominium complexes may include monthly or yearly fees. This will vary with every property, so be sure to ask your real estate professional about what applies to homes you are considering.
Maintenance Costs
Home buyers often forget to budget for maintenance costs. Whether you are purchasing a condominium or single family residence, there are both known and unknown items to be addressed. Be sure to account for such items and calculate larger amounts for older homes or properties in regions with rougher climates.
Determining How Much Home You Can Afford In MA
Determining how much home you can afford in MA is an important step in the home purchase process. Price dependent home buyers should stay up to date on fluctuating interest rates and the affect that it can have on monthly payments. They should also know what costs will remain unchanged versus those likely to adjust over the years. Some costs, such as repairs, may be completely unpredictable but should still be included. Only by performing a thorough evaluation of all costs involved in property purchase and ownership can buyers make an educated decision on what to buy. For further information contact Christopher Graves at Emery Federal Credit Union via phone at 781-759-1200 x22 or email christopher.d.graves@gmail.com.