Mortgage Calculator Feature 1: Factoring In Forgotten Homeownership Costs
Mortgage calculators help a buyer with more than the obvious house price, interest rate, length of loan, and down payment. Use a calculator that includes your home insurance payment, property tax rate, and, if applicable, home owner association dues. Even these comparatively small numbers can be important when determining what you can afford.
For example, home buyer with an income of $60,000 per year and ten percent down could afford a home of about $270,000. But this number might assume affordable insurance and taxes, and no homeowner’s association (HOA) dues.
Lenders consider your entire payment when they qualify you for a house including loan principal and interest, homeowner’s insurance, property taxes, and HOA dues. Back to the above example of the buyer who makes $60,000 per year. This time, we will increase the extra costs as follows.
- Homeowner’s insurance: +$300 per year
- Property Tax: +0.2% per year
- HOA dues: +$100 per month
The maximum price a buyer can afford drops a whopping $30,000.
As a home buyer, look at the details of the real estate listing annual taxes and HOA dues,. Ask your insurance agent about a rough estimate of homeowner’s insurance cost.