Does Spring Have You Itching to Upgrade But Current Home Prices Have You Overwhelmed?

Deciding how much you can afford to spend for a new home, may have you overwhelmed so you feel paralyzed by indecision and doubt.

Let's say your realtor shows you homes in a range between $470,000.00 and $670,000.00 which is a difference of 200,000.00.  Before you cross off your $670,000.00 dream home, let's explore reality.

First, most realtors send you to a  mortgage loan officer so there are no surprises when it comes time to seal the deal at your closing-or settlement depending on where you live. It's a good place to start when your realtor asks you what prince range you're considering buying.

Typically, mortgage companies will qualify you so you know how much you can borrow from them. They tend to quote on the high side however, so it's best to prepare a complete, accurate monthly budget based on what you spend now.  Include everything- like food, new shoes, traveling and include new expenses you anticipate like landscaping, improvements, or a rise in utilities. Seeing on  paper how much money you actually will have left over every month will help you be aware and resist the temptation to get in over your head. More importantly, you'll be taking charge and feel in control of your life to fashion your future  in your dream home. 

Don't forget to include any HOA fees in your monthly expenses. They can range from a comfortable $35 a month to the $ridiculous.  Remember, you won't recover those when you sell, at least not technically but they may increase the marketability of your house, especially if you have desirable perks an efficient HOA provides . Do the math. If they are  say, $600 a month now and don't increase, that's $7,200 a year and $72,000 if you stay for only 10 years.  Know that those fees can pay for a range of things from providing a mere nothing to snow removal, a swimming pool and pickleball, and some even include paying utilities, cable, and insurance. It may be worth an additional $72,000 to send your kids off to the pool and to be surrounded by beautiful landscaping with roads void of snow when friends and family visit. 

The tax benefits of buying vs renting can best be addressed by your accountant so let's get back to the skinny of how much more an additional $100,000.00 to $200,000.00 will actually cost you every month, which is really what is relevant when you're buying a home.

Here's the simple of it.

A $470,000.00 mortgage at 6.5% will cost you around $2970.72 a month. 

A better home costing $570,000.00 will only increase your monthly payment  to $3602.79, which will be $632.07 more and $632.07 sounds a lot better than $100,000.00. It may be well worth the better schools, extra bedrooms, pool, or whatever else the $100.000.00 buys you that you desire.

If the $570.000.00 home doesn't completely light your fire and a $670,000.00 home blows you away but scares the bejeebers out of you, remember that's going to cost you $4234.86 a month and not the additional overwhelming $200,000.00 all at once.  

Providing you're comfortable with it fitting your budget, you can qualify for the higher mortgage, and the home appraises for what you pay, there's no need to let the daunting extra hundreds of thousands of dollars stop you from seeking and selecting the home of your dreams.