By Robin Shapiro
With 30-year fixed rate mortgages at around 7% (as of this writing), some people may be wondering what they can afford to pay. A 7% 30-year mortgage costs about $665/100k/month. Therefore, a $600k mortgage loan would cost about $4000/month. Real estate taxes, homeowners’ insurance, and flood insurance all add to the monthly “nut.” However, renting an apartment nowadays isn’t so cheap either, and you don’t build “equity” when you rent. You may really “need” the house but are concerned about the monthly cost. Keep in mind that there is some chance that you might 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%, and I even did it once more after this.
The challenge for many people is to have enough down payment money to make the purchase. How much down payment do you need? Are you a veteran and eligible for a VA loan? Are you a first-time home buyer? If a specific seller would accept such a buyer (some sellers would, and others wouldn’t – it’s the seller’s option), then a smaller down payment could work. However, most sellers like to see at least a 20% down payment. Call me. Love, Robin