Determining home affordability in Washington is a critical starting point for any real estate buyers and should be performed prior to seeing homes. This saves time and prevents heartbreak. There are different expenses to evaluate including loan payments, property taxes, homeowners insurance, property fees, and ongoing maintenance.
Loan Expenses can be the same for the life of a mortgage or can adjust at certain periods of time. This is dependent on your specific loan program. Typically, monthly payments include contributions towards the mortgage principal and an interest charge. It therefore relates to your exact interest rate, which is not typically identified until you get a home under agreement. Your mortgage professional can create an estimate using the current rate and a home price, but note that these estimates are not exact since every property will be different.
Most mortgage companies require that you contribute to an escrow account for annual hazard insurance. The service company then sends the payments from that account directly to the city or town. This is their way of guaranteeing that you maintain enough funds to cover them and that payments are not delayed. Tax amounts vary based on the area and assessment amounts. Larger properties or those with more land usually have higher taxes. Rates can also increase yearly.
Hazard insurance is another item which commonly require the escrow of money. Payments are due annually and can be re-assessed by your provider. You have the option of selecting your insurance company, however certain amounts will be required to meet your mortgage terms.
There are other routine fees that you may need to consider. If your loan to value ratio is greater than eighty percent, mortgage insurance may be required monthly until your loan is reduced to a certain percentage. Homes in subdivisions or with associations often include monthly or yearly fees. This will differ with each property, so be sure to ask your real estate broker about what applies to homes you are considering.
Homeowners sometimes overlook repair costs. Whether you are purchasing a condo or single family residence, there are both expected and unexpected issues that arise. Be sure to account for repairs and estimate larger amounts for older properties or homes in areas with rougher climates.
Determining home affordability in Washington is one of the most important steps in the home buying process. Price dependent consumers should stay educated on fluctuating interest rates and the affect that it can have on monthly payments. Home buyers should also know what recurring amounts will remain constant versus those likely to adjust over the years. Some expenses, such as repairs, can be somewhat unpredictable but should still be added to the budget. Only by developing a thorough calculation of all costs involved in property purchase and ownership can buyers make an educated decision on price range.