When you’re looking for a new home in Lakewood or Long Beach, especially if you’re buying your first house, it makes sense to figure out exactly how much you can afford.
Unfortunately, it’s not enough to determine that your mortgage payment will be less than what you’re paying in rent. Counting on that simple calculation can land you in serious hot water once you’re a homeowner—so here’s what you need to figure out if you’re thinking about buying.
How Much House Can You Afford?
When you rent a house or apartment, you’re not responsible for repairing issues you didn’t cause. When the sink gets backed up, the air conditioning goes out, or the paint chips, you call your landlord and the issue gets fixed.
If you’re a homeowner, though, the costs of those repairs come right out of your pocket. For most people, keeping a repair fund is the way to go—and the total in that fund should be no less than one monthly mortgage payment (but if possible, it should definitely be more).
You’ll also have to worry about taxes, insurance, and a handful of other expenses.
On many mortgage loans, property taxes are bundled into monthly house payments. The money, once it goes to your lender, is separated from your mortgage payment and put into an escrow fund. Your lender will likely make the property tax payments for you, which saves you a big pain at the end of the year when they’re due. However, you’ll need to double-check that your lender does that for you; not all do, and that means saving for and paying your property taxes is your responsibility.
One more thing: Sometimes, even if your lender has been stashing away money for you each month, it’s not enough to pay the property taxes. You’ll have to be prepared for that, because if you don’t pay your property taxes, you could lose your home.
If you have a mortgage loan, you’ll be responsible for paying for homeowners insurance. Sometimes that’s also part of your mortgage payment, but it pays to check before you assume. (You’ll still have to find your own insurance and share your insurance company’s information with your lender, so at least you’ll have a good start!)
DO YOU NEED TO TALK TO A REALTOR ABOUT BUYING A HOME IN LAKEWOOD OR LONG BEACH?
If you’re ready to start your home search, we’re here to help. Call us at 562-882-1581 to let us know what you need. We’ll help you find it.
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