Expense List for Buying a Home

There are many expenses that come with buying a home. The following list is a good example of what to expect:

Down payment - A minimum of 20% of the home's purchase price is usually required for the best loan terms and to avoid paying private mortgage insurance (see below), but it's entirely possible to buy a house with a smaller down payment.

Monthly mortgage payments - Include loan principal, interest, and sometimes additional charges for taxes and insurance.

Property taxes - Amounts vary, but the average is around 1.5% to 2% of a home's purchase price.

Homeowners insurance - Again, the cost varies. Call insurance companies for more information, or contact the Florida Department of Insurance for surveys of prices for insurance rates.

Private mortgage insurance (PMI) - If your down payment is less than 20% of the purchase price, this can tack several hundred dollars each year to your loan costs until the equity in your home reaches 22%, when you no longer need the insurance.

Maintenance - Varies year to year, but you may spend about 1% of the purchase price annually on maintenance and repairs.

Closing costs - Include points and other fees charged by the lender, which can add up to 3% of the amount you borrow; title insurance, from a few hundred to over a thousand dollars, depending on the purchase price of your home; inspections, about $200 to $500; and other miscellaneous fees. Many of these costs are negotiable between the buyer and seller, and are dependent on local customs. You can also negotiate with the lender to reduce, and in some cases completely waive, certain costs.

Housing expense ratio Typically, mortgage lenders won't allow these housing expenses to be more than one-third of your household monthly gross income. In other words, 28% of your monthly gross pay (for example, your annual salary divided by 12) is the usual maximum "housing expense ratio" allowed by lenders.

The "housing expense ratio" compares your monthly gross income to "PITI," an acronym for:

* Principal, or the amount you borrowed, of your mortgage loan

* Interest on the mortgage loan

* Taxes: property taxes

* Insurance: homeowners and private mortgage insurance (PMI)

Debt-to-income ratio.

On top of the 28% lenders allow for monthly housing expenses, they will usually let you spend another 10% for other debt repayments such as student loans, car loans and other similar loans. Added together, your housing expense ratio and monthly recurring debts make up your "debt-to-income ratio," and should not be higher than 38% of your monthly gross pay.

Now the Good News

The good news is that there are tax benefits to owning a home. The IRS lets you deduct mortgage interest and real property taxes, within limits, on your annual income tax return! Contact a real estate or tax attorney for the specifics in your area.

Genesis Font is an SEO and Developer for LoansInteractive.com> Mortgage and Loan Officer Websites. We also offer Quality Web Hosting Services.

---

Hurricane Katrina And The Impact On Real Estate Prices

In the wake of Hurricane Katrina's wide path of destruction,... Read More

Conversation & The Real Estate Investor

One key that makes investors is conversation or should I... Read More

Zero Down Real Estate Investing

Zero down? Why would a seller want to walk away... Read More

Lake Havasu Real Estate

Lake Havasu real estate is a hot commodity. With surrounding... Read More

Bubble, Bubble, Toil and Trouble?

We are selling our house. We have lived here for... Read More

Basic Real Estate Valuation

Given the current interest (dare I say hysteria) associated with... Read More

Ten Big Mistakes That Will Lose That Property Sale

If you are serious about selling your home, you probably... Read More

Maximizing Curb Appeal and First Impressions to Sell your Home

We all know that a home or property of any... Read More

Lease Options or Rent to Own?

Finding a rent-to-own house is one of the many ways... Read More

Do You Speak Real Estate?

Anyone interested in real estate should be able to talk... Read More

Cheap, Bargain, Real Estate; Good Deals, Below Market, Low Priced Properties Are Available...

Cheap, Bargain, Real Estate; Good Deals, Below Market, Low Priced... Read More

Using Transformation Psychology to Sell Investment Properties

Satisfying and lucrative real estate investment depends upon your correct... Read More

5 Hot Tips for Successful Real Estate Investment

The last downturn of the global stock market saw millions... Read More

Are You Trying to Hit a Home Run With Your Prospects Without Asking Them on a Date?

Real Estate email marketingDo you remember the old School girl/boy... Read More

Why Canadian Real Estate is Such Good Value

Real estate agents, Canadian citizens and foreign investors interested in... Read More

The Nose Knows

If you plan on getting the most from the sale... Read More

How to Calculate Real Estate Rehab Profits

If you are investing in real estate you will face... Read More

Should You Buy Real Estate Now

I have been seeing the market on fire for a... Read More

Staging Homes for Top-Dollar Sales

Wouldn't it be nice to have Roger Hazard's design team... Read More

How to Own a Dream Home in Spain

Every year hundreds of thousands of foreign visitors travel to... Read More

Becoming A Battle Hardened Real Estate Veteran Without All The Scars

Step 1 is always to determine the fair market value(FMV).... Read More

Buying Land Online

In the old days people generally only bought land and... Read More

Home Inspectors - Negotiating a Lower Price

To help you negotiate a fair sale price for a... Read More

What Is a CMA

"CMA" is an abbreviation real estate agents use for a... Read More

The Psyche of The Seller and The Tenant Buyer

For those of you who were not psychology majors the... Read More

Burn, Baby, Burn!

Luxury homes are lots of fun to inspect. Sure, the... Read More

Is a Vacation Home Right for You?

Many of us dream about owning the vacation home in... Read More

Real Estate Appraisal - Rental Properties

Real estate appraisal for rental properties isn't the same as... Read More

Renting Versus Buying A Home

Renters are often in a quandary as to whether it... Read More

Think You Can?t Afford Your Own Home, Think Again!

Do you have bad credit, no credit, filed a bankruptcy,... Read More

Tenant/Buyers Have Multiple Options

Lease Purchasing affords the tenant/buyer a wonderful opportunity to get... Read More

How to Afford Your Dream Home

Is it your dream to one day own a holiday... Read More

Finding Southern California Real Estate Foreclosure Property

Southern california real estate foreclosure:If you want to find southern... Read More