What can I afford?

Can I Afford to Buy a House?Be Sure to Include in All the Costs
Ken Go (888)822-5363
Potential buyers sometimes forget to factor in the property taxes, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape and pool maintenance, not to mention furnishings and design accessories once you move in.
The days of calling up the landlord to fix your problems come to an abrupt halt when you're a homeowner. You'll be responsible for everything from malfunctioning appliances to leaky faucets to broken heating and air conditioning units and everything in between. And if you buy an older home, you'll probably eventually encounter costly repairs, such as replacing the roof or windows.
To determine whether you can afford to buy a home, you should do the following:
1. Determine the property value of homes that interest you. The property value is determined by comparing the prices of homes recently sold of similar size in the same neighborhood. Your real estate agent will be able to provide this information to you.
2. Review different mortgage loan types and compare their required down payment amounts to the money you have available. Make sure you will have a payment that is affordable for a duration of three to five years, include that taxes and insurance. Don’t cheat yourself with the low rates or the negative amortization loans that is available.
3. Get a letter to guaranteed your closing costs, including points , taxes, recording, inspections, prepaid loan interest, title insurance and financing costs from your mortgage lender or a real estate professional. These will generally add up to between 2 and 3 percent of the property value. You'll receive an estimate of these costs from your lender after you apply for a mortgage but request for a guaranteed rate and fees.
4. Add the down payment requirements and the closing costs together to determine the amount of money you'll need right off the bat. But you're not done yet.
5. Think about the actual move. Will you hire a moving company or rent a truck? Either way will cost you. The more stuff you have, the more it will cost.
6. Property taxes. Many lenders will require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment. You can figure your average annual tax rate will be about 1.25 percent of the purchase price of your home. For new homes, ask about Mello Roos ( Its an act that allows county, city or special district to finance public facilities and services thru homeowners).




7. Next, budget for maintenance and repairs.
8. If you have other income that will come in to help you pay the mortgages, make sure they are on going to be at least two to three years guaranteed and you should have an alternative plan if that fails.
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce your debts or creatively increase your income—it can come from a variety of sources.
My advise to new homeowners: Make sure you can afford the payments and don’t cheat yourselves with short term loans or negative amortization loans that will get you in trouble.
For existing homeowners that are having problems paying: Don’t refinance only to be able to keep your head above water for a few months, if you cant really pay the mortgage sell your house and repurchase later when you can afford it then.
And of course, you'll want to weigh perhaps the biggest benefit of all—having a place to call your own. Call me anytime for any inquiries: Ken go (888)822-5363 or write: kennethgo@verizon.net