Thinking about how much money we will need to buy a home has always been overwhelming, but it seems that it is being even more so for 2022, where inflation is through the roof, the Federal Reserve has twice been interest rates, and with real estate prices that increase instead of falling. . All these are factors that you must take into account if you want to have your own house, and although the amount you should save will depend on many factors, such as the type of property you are looking for, the area and the square meters, we will help you with the keys to what you should take into account to get your budget.
1.- The initial payment
Which usually hovers around 10% of the value of the property. It is the hitch, the advance that they ask you so that you can book that house and that, gives you the right to stop showing it to the rest of the buyers.
It is not always necessary that you contribute 10%, keep in mind that the larger your down payment, the lower your debt. According to the National Association of Realtors, on average, the first-time homebuyer typically makes a down payment of 7% of the total home value. However, everything will depend on the type of mortgage you are processing since there are some that allow you a very low down payment, which can even reach up to 3%. The key is to not only think about the down payment but how you’re going to pay the rest.
There are even housing programs that support initial buyers, some state governments run them, and others are run by the federal government.
2.- Calculate your closing costs
Closing costs are the charges you must pay when the purchase of a property is completed. For example, the administrative expenses that are required for the mortgage process to be authorized. Experts say it ranges from 2% to 5% of the total amount you’re borrowing.
These costs include the following concepts: an appraisal fee, credit report rate, application fee, title search fee, property title insurance, and appraisal, to name a few. You should be clear that they can vary according to each lender and also to the area where you want to buy your new home.
3.- The amount to be paid for the mortgage
Here we mean that you know exactly how much money you will have to allocate to the payment of the mortgage of your monthly salary and with it you will realize if it is real to make this move. Even lenders have their mortgage calculators or also called simulators, which can help you set the minimum budget you will need per month. The mortgage rate will have a major impact on your calculated amount.
The recommendation is that you look for options with different lenders and do not marry a single offer, mortgage rates will make the option to take attractive. You should also take into account that the most possible thing is that you have to pay mortgage insurance, which ranges around 20% of the initial payment. Do not forget that you must also pay property taxes at the state level and that they will also vary according to where you buy.