Budgeting for a New Home

If you've recently started the search for a new home you know how easy it is to jump on a search site like HAR.com and narrow results by price.  And while searching may seem simple, budgeting for a new home is waaayyy more complicated. The purchase price of a home is not the only cos - it's only the start.  

So how are you suppose to figure out how much house you can afford? You'll need to look at two primary factors: cash on hand and monthly budget. Let's dive into the numbers:

Monthly Payment

The US Census Bureau suggested that consumers should keep housing costs to 30% or less of household income. That's right: housing costs, not just the cost of your mortgage. We're talking mortgage principal, interest, taxes and insurance.  (In the real estate world we call that PITI). Plus you may have HOA dues, maintenance fees and other expenses to consider.  Wowzers!  

Downpayment

Many lenders require a 20% downpayment at closing. It can take some serious time and discipline to save up that kind of cash reserve, so start now.  But don't wait until you have your nest egg stocked up to consider buying a home.  If you have good credit or other circumstances, you may quality to put a smaller amount down.  The only way to know for sure is to reach out to a lender.  And I believe it's never too early to connect with a good loan officer to help nail down your budget and figure out your next steps.  Use the form below to contact me now to get the names and contact info for my preferred lenders.

Closing Costs

In addition to your downpayment, you'll need funds available to cover closing costs.  They vary from state to state, but in Texas they are higher than the national average and going up.  Boo! 

What are you paying for? Closing costs include everything from loan origination fees, title insurance (the seller will likely pay yours but you'll need to pay title insurance for your lender) and more.  

Bottom Line

With rising rents, buying a home can still be a good idea. And with Houston's strong real estate market, it's very likely that you'll be able to build equity quickly.  But before you jump in headfirst, talk with a Realtor and lender to get a real understanding of what you can afford.

Contact me to discuss your home buying budget

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