You’ve Got Home Purchase Power Or Do You?
When buying a home you have a bunch of numbers to think of and a ton of acronyms. Whether it’s PMI, Interest Rates, Fed, Bond Numbers, Commission Rates, finding out what Millage means and Origination fees. All of those can be important but usually what you really need to understand is your power… your home purchase power. What most home buyers do is head on over to their favorite online mortgage calculator and punch in some numbers to find out what the payments would be on their desired home. That’s not the best way, so let’s have fun with this and take you through each level of determine your home purchase power.
Level 1 – Most is another word for Average.
Most home buyers use a calculator to figure out payments or what they can afford and leave it at that. Not very powerful. If you’re here then be prepared to be disappointed.
Level 2 – Smarter Than A Fifth Grader
Some people try to be smart about this, they’ve listened to Dave Ramsey or attending a home buying seminar. They are aware of taxes and insurance to the equation. They notice that the home they thought they could buy is now less because they are including some real costs now. If this is you, then you’re real close. There’ll be some suprises if you stay here, but you get the gist of home buying.
Level 3 – The Graduate
If you’re in this level of home buying you’re well on your way. You’re taking into account mortgage, insurance, taxes and now you’re thinking about HOA Fees. In fact, HOA fees have more effect on a payment and your home buying purchase power than anything else except for taxes (excluding your credit and down payment of course). If it costs you $5 per month for every $1,000 you finance then a $600 Annual Association fee can change your purchase power by $10,000 easily. So how do you put this all together? Say our loan specialist says you are approved for up to $300,000 for a home. Our preferred Lenders are really smart, so they already estimated some taxes and insurance for you. However you were looking at Hamilton Mill Homes For Sale and found out their association fee is $725 a year. If we use the $5 per $1000 rule, then you could only buy a home that is $288,000 roughly. The HOA zapped your home buying purchase power. Feel free to call us or comment below about this important concet.
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