How Much Should You Spend on Your New Home

Today we are going to talk about how much you want to pay for a new home. The first thing that will come to your mind is the actual price for the home. Do I want to spend $150,000, $250,000, or more for my new house? Before you decide on the actual price or price range for your new home, you need to consider what you can afford to budget and want you want to budget for your monthly home expenses. This will go a long way in determining the price of your new home you want to pay as well as the size of your new home.




What makes up your monthly mortgage payment that you need to consider:


Interest Rate: Your interest rate is one factor in how much your monthly mortgage will be. Almost all the time, with a few exceptions, this is a cost that will not change over the life of your mortgage loan.


Property Taxes: Property taxes can make up a huge part of your monthly mortgage payment. There are many factors that affect how much you will pay in property taxes including: the price of the home, tax rate of location of home, and if the home is located in a MUD district. Your taxes can increase your monthly payment hundreds of dollars and even over a $1000 a month. Understanding the cost of taxes in your area is important, as yearly taxes for the same priced home can vary by $1,000’s, depending on the tax rate for an area.


Homeowners Insurance: Is another cost that effects your monthly mortgage payment. Insurance you will be required to carry or would want to carry can include: a general homeowner’s insurance policy, you may be required to have windstorm, and flood insurance as well. Insurance for your monthly payment amount can be several hundreds of dollars a month. The good news on insurance, is that you have more control over this. As you can shop insurance yearly to get the best rate.


Homeowner’s Associations: If you live in a subdivision there is a good chance you will have yearly HOA fees. Depending on the amenities of the subdivision, such as common areas, pools, and parks these fees can usually range from $20 a month to a $250 a month.


By understanding what these costs will be for the area or areas you are interested in, will help you decide the price you can afford and want to budget for your monthly mortgage payment. If you can qualify for a lower interest rate, or the home you choose is in an area that has low taxes, understanding your insurance needs and shop for best rates, than that is more money you can spend on the actual house itself. You may be able to spend more money on the home of your dreams than you thought, or still buy the home of your dreams and have money left over for that yearly family vacation.

If you would like more information on each of these expenses and how to save on them, contact me and I would be happy to answer any questions you have.

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