How Much House Can You Afford?

Understanding The Related Costs of Home Buying

You will need to think about more than a mortgage payment to determine if you can afford a property. To assure you are purchasing a property within the confines of your budget, you must consider settlement costs as well. How much can you afford? Coldwell Banker® professionals provide some insight.

Deposit and Settlement Costs

These terms refer to how much money the buyer will have to pay out of pocket and up-front to purchase a property. Deposit payment is simple; it refers to the amount of money the buyers need to invest at settlement toward the price of the property. Most lenders request a deposit payment of at least 10 percent of the cost. For first-time homebuyers, this may be difficult to achieve. Several programs are available and relatively easy to qualify for that allow buyers to make deposit payments of as little as 5 percent of the price of the property. Consumers can evaluate their options with the advice of their lender. If you are having difficulty raising the deposit, let your Coldwell Banker Sales Associate know immediately, they might be able to provide additional options.

Settlement costs vary from state-to-state, city-to-city and even from home-to-home. Settlement costs can include solicitors fees, home inspection costs, title search fees, bank fees, termite inspection fees and council rate adjustments, to name a few. The mortgage lender requires some of these services, others are legally necessary depending on where the buyer lives. To better understand the necessary settlement costs in the area they are looking to buy in, consumers can contact their local Coldwell Banker office and their solicitor/conveyancer. For the sake of estimating, settlement costs can range from 3 to 5 percent or more of the value of the home.

While up-front costs are more than one would pay for renting, home ownership can still be a sound investment and certainly an emotionally rewarding experience.

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