Calculating Your Budget

To estimate your budget, add up your total financial worth and then subtract all the costs included in the purchase. Here are some of the expenses you will carry.

Down Payment

Most homeowners contribute a down payment on his or her new property. The down payment is a percentage of the purchase price that the buyer pays in full before closing. The larger the down payment, the smaller your mortgage will be. So you need to be thinking about how much you can put down.

Cost

There are quite a few costs when you’re buying a new property.  Make sure you understand how much each cost is and factor them into the final budget. Here are some examples of these costs:

Monthly Costs: The calculation of your entire monthly costs including the mortgage, insurance, taxes, etc.

Points: Borrowers have the opportunity to reduce the interest rate on their mortgage by paying points at the beginning of the loan. One point is one percent of the new loan.

Additional Fees: Examples of possible fees will be explained in my next blog titled “Estimated Buyer’s Cost Worksheet”

Final Budget

Now you’re ready to calculate your final budget. Remember to include all of your available money, monthly salary, additional income, and then subtract the down payment, monthly mortgage payment, closing costs, moving costs, and any additional expenditures you might accrue. When you have arrived at your estimated budget, you are ready to begin the search for your new home.

It might look simpler (but probably still confusing) put like this:

(All of your available money+monthly salary+additional income)-(down payment+monthly mortgage payment+closing costs+moving costs+any additional expenditures)=Estimated budget

Now, if you’re completely lost let me know…My purpose is to make your life easier!