One of the first questions a homebuyer should ask themselves when they start their home search is, “How much home can I afford?”. A general rule in the real estate world is that your mortgage payments should not exceed 30% of your monthly income. One of the best ways to know what you can afford is to determine the possible payment range by comparing the price of the home with other important factors.
The first step to determining your monthly mortgage payment is understanding how much you are looking to borrow. What do you plan on putting down for a down payment? Subtract your down payment from the purchase price of the home, and that will give you the amount of money you will need to borrow from a lender.
Know Your Rates
Rates change all the time, so keep in touch with your mortgage lender to stay up to date on current rates. With rates still at an all-time low, now is one of the best times to buy a home. Your credit score has a lot to do with the rates you will receive – so be sure you have good credit.
Choose Your Loan Term
Your monthly mortgage payments will be determined by a number of factors, including the term of your loan. Say you borrow $175,000, your monthly payments would be more with a 15-year mortgage than it would be with a 30-year mortgage. Your mortgage lender can help you determine which loan term works best for you and your situation.
Don’t Forget About the Additional Costs
Many homebuyers don’t realize how much the additional costs add up. You need to take taxes, homeowner’s insurance, and depending on your downpayment, private mortgage insurance, into consideration.
Looking to buy or sell a home in the MetroWest area? Real estate agent Robert Brown of RE/MAX Executive Realty services areas such as Hopkinton, Hopedale, Milford, Upton, Mendon, and many more. To learn more about MetroWest real estate agent Robert Brown, please visit the Meet Your Agent page on SellMyMetroWestHome.com
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