Buying a house can be a stressful time. There are many things to take into consideration, and a lot of items to have in order before the purchase can go through. In order to take some of the stress out of the buying process, it is valuable to the potential homeowner to know just how much they can afford. By analyzing their monthly income, they can figure out the most they can afford to pay each month using a mortgage calculator.
But the calculator will often give only part of the story. The borrower must realize that principal and interest are just a small portion of their monthly payment. In order to find the true cost of the mortgage payment they should be aware of the tax rates in their area (these can often be found in the county’s online database). Insurance costs vary by region, age of the house, and several other factors. It is often a good idea to get an estimate from an insurance agent so you know roughly what you will be looking at. If a down payment is not being used, or if it is not very large, then private mortgage insurance will be required.
While not exactly part of the mortgage payment, other costs should be figured in when determining what to spend on a house. Utilities will be due each month. Talking to the previous owners of a home you are looking at will get you a good feel of how much you can expect to spend. Even the newest of homes will often need some repairs. Maintenance costs will pop up, and at least a small slush fund should be set up for when they do. Finally, upgrades to appliances, additions to the house, a better roof, better windows or doors, and countless other upgrades will be needed.
All of these things add up when paying for a house. The best thing the borrower can do is to get a feel before making the commitment to purchase one. Start with a mortgage calculator that takes into account taxes and insurance, so you, the future homeowner, can get a grasp on what they are able to commit to. Understanding that while the principal and interest payments will remain the same and the taxes and insurance will keep going up over the years will help keep things in perspective. There will be other bills that go along with home ownership. The best thing to do is to estimate your mortgage payment, and err on the high side. That way when the bills are actually less, there will be plenty left over to save for retirement, store away for educations costs, or go out on the town for a nice meal.