Very often, people buy houses without first knowing what they can really afford – often a costly, life-impacting oversight. Qualifying for a $250,00 mortgage doesn’t mean that you can actually afford that much house. How much you can really afford to pay for a house in Floresville is determined by a lot more than mere sale price – your recurring monthly payments and other outstanding debt, for example. And the ongoing costs of home ownership have to be factored in when determining what you can really afford. Let’s take a look, then, at some of the important pieces of this puzzle to figure out how much can you really afford to pay for a house.
As we mentioned, the existing debt you have (besides the mortgage) will play a large part in how much you can afford to pay for a house in Floresville. And this applies especially to credit card debt when budgeting what you can pay for a house. While lenders do take into account all your debts, they look at only your minimum monthly debt payments. And that minimum monthly payment can become a large amount of money over the years.
In many cases, you’re likely to reach a point at which you will want to or need to make more than the minimum payments. For example, a $30,000 credit card debt at 18% on which you pay $500 a month will cost you a total of $78,000 over the course of 13 years. You probably wouldn’t make those minimum payments the whole time and wind up paying 2.5+ times more than the original debt.
But debt doesn’t tell the whole story about what you can afford to pay for a house in Floresville. Most people have plenty of other expense that doesn’t even figure into the mortgage qualification process, but that is still part of your regular monthly expenses nevertheless. Your ability to afford a house depends on more than just those things that show up on your credit report, for example:
- Car insurance
- Eating out
What the bank considers debt is only part of the affordability picture. Buying more house than you can afford may force you to cut back drastically in these other areas. Who wants to not be able to spend money on the things that you like to do for pleasure?
Variable Costs of Owning
In determining what you can pay for a house in Floresville, you also have to consider the fact that the cost of home ownership isn’t fixed. Buying and owning a house has associated costs that can vary and often greatly increase. Chief among these are the home owner’s insurance, which can vary from year to year, and property taxes, which almost always increase. And there are costs for maintenance and repairs that inevitably get larger as the property ages, especially when it comes the things like roofs.
Need for Emergency Cash
How much you can actually afford to pay for a house in Floresville is also determined, at least in part, by how much in reserve funds you can keep on hand to cover emergencies, especially emergency repairs. Studies show that nearly half of American don’t have enough cash on hand to cover a $400 emergency expense. And keep in mind that a new roof will run you up to $10,000. Short of borrowing this money for a new roof, you would risk being delinquent on mortgage payments if you didn’t enough reserve cash. And even is the need to replace the roof is because of an insurance claim, you still have to pay the deductible which is normally 1% of the value that your home is insured for. In other words, for a $250,000 house your deductible for a claim is $2,500.
Buying a house is a big step and a large financial transaction even for experienced homebuyers or investors. You should, then, before signing the contract, figure out how much you can really afford to pay for a house in Floresville. For there’s a lot more to it than just how much your bank is willing to lend.
Are you ready to buy a house in Floresville? We can help! Send us a message or give us a call today! (210) 216-7722
As the Floresville Real Estate Agent – Faye Y Taylor is here for your questions and to help