The decision to purchase a home is a big one. It can often be stressful to think about the money required to buy.
To make it less overwhelming, we wanted to share with you what is included in your monthly housing cost and provide some tips on how to be prepared for buying.
Your monthly housing costs include principal, interest, property taxes, home insurance, private mortgage insurance (PMI), and homeowners
association (HOA) dues.
- Principal: This is how much you want to pay for the home. Often sellers will have a listed price, but with your real estate agent, you can try to negotiate this price.
- Interest: Your lender will offer you interest on your home loan. There are options for 15-year or 30-year mortgages; visit a financial institution to assess your options.
- Property Taxes: We are lucky in Wyoming because we have low property taxes. Your local government sets this rate.
- Private Mortgage Insurance: You will have to pay this insurance if you have a conventional loan to help mitigate risk for your lender.
- Homeowners Association (HOA): This is a self-governing organization in “common-interest” communities where homeowners collectively pay fees to maintain the units or neighborhood. Your home location will dictate whether you have to pay this fee.
Outline the overhead costs to establish what you want to save for funding. Then be firm on this figure, so you are comfortable with which homes you will be able to select from when shopping. Typically it would help if you had your debt to income ratio in a place where you can qualify for a loan. Everyone has a different financial position regarding debt, so the goal is not to exceed more than 35% of your available credit.
Would you like to learn more or receive further guidance? Give us a call at 307-635-0303, and we’ll help you!