What Can I Afford?
By Robin Shapiro
With 30-year fixed rate mortgages at around 7% (as of this writing), some people may wonder what they can afford. A 7% 30-year mortgage costs about $665 per 100k/month. Therefore, a 600k mortgage loan would cost about $4,000 a month. If rates change, then a 6.5% mortgage costs about $632 per 100k/month. In this case a 600k mortgage would cost about $3,800 a month. A 7.5% mortgage costs about $700 per 100k/month. At this rate a 600k mortgage would cost about $4,200 a month.
Real estate taxes, homeowners’ insurance, and flood insurance add to the monthly “nut.” However, renting an apartment nowadays isn’t so cheap and you don’t build “equity” when you rent. Remember that you may be able to refinance the mortgage down the road to a lower rate. My first mortgage was at 11.5%. Two years later, I refinanced it down to 9.5%. I even did it once more after this.
The challenge is to have enough down payment to make the purchase. Veterans and first-time home buyers may be able to make smaller down payments. The monthly payment would be larger in this case. Next Monday is Presidents Day. NYC public schools will be closed for midwinter recess for the week (February 17 thru 21). Call me. Love, Robin.
