When it comes to assessing how much you can afford when you buy a home, there may be some items that you don’t necessarily think about.
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If you’re thinking about buying a home, there are a couple things I want you to be aware of, including your affordability.
When it comes to calculating your affordability, there are several factors I want you to think about. It’s not just your principal and interest.
If you’re putting less than 20% down, quite frankly, you’ll be assessed private mortgage insurance, and that can add a couple hundred dollars per month to your payment. Additionally, you’ve got local property taxes that will also increase your payment.
The next thing I want you to think about, especially if you’re a move-up buyer moving from, say, a 1,400 square foot property to a 2,800 square foot home, is that your utilities are going to increase. You need to be thinking about what those sorts of things are going to cost.
Analyze each property based on its own merits.
Further still, there are special items to pay attention to. Do you suddenly have a sewer? Do you have more property to irrigate trees, a garden, or grass? All of that will impact your affordability.
You’ll want to be looking out for HOA fees, which can come monthly, quarterly, or annually. Depending on what the HOA does for you, there may not be enough reward for the risks involved. Analyze each property based on its own merits.
Flood insurance can also impact your affordability. Living in the Verde Valley, we love to be down by the creek. Many properties that are close to waterways are considered to be in flood zones, meaning that you’ll have to increase your monthly payment to include flood insurance.
Finally, make sure that the property you want is located in a fire district. If it’s not, you’ll have to pay a subscription to have fire protection. This won’t be on your taxes, so you’ll have to budget for that.
If you have any questions, feel free to reach out to me. I’m here to help you negotiate for what’s best for you and your family as you look to buy your next home.