Consider ‘monthly nut’ as well as price before buying a home

We all know market conditions have impacted the affordability of everything from steak to gas to housing.

So, if you are looking to change your housing situation, make sure you know all of the pieces and parts that go into your total monthly housing expense – especially those costs that are charged on an annual or semi-annual basis.

With that in mind, here are the things you should account for if you want an accurate picture of your monthly nut.

Mortgage payment: This includes your principal and interest payment. It gets tricky, though, because the payment will be based on the interest rate you lock into, not the rate you hear about in commercials. It is very time sensitive and specific to your situation.

The other tricky part is you don’t typically lock your rate until you have a signed purchase contract on a specific house. Your best bet is to create a spreadsheet that calculates the monthly payment at progressively higher interest rates on progressively increasing loan amounts. This will help you find your sweet spot for affordability.

Property taxes: In California, property taxes are due twice a year, with each payment covering half of the annual amount due. It’s based on the assessed value of the home, determined by your purchase price, not the amount on the previous owner’s property tax bill. Many lenders use a 1.25% annual property tax estimate when they are pre-approving you for a home loan. But each house will have its own breakdown of fees, which can be found online by its address or parcel number.

Once you get familiar with a few property tax bills, you will be able to spot such variables as water district bonds, school district bonds, public sewer, local pest abatement that can raise or lower your potential tax rate. You can choose to “impound” your taxes and include them in your monthly mortgage payment rather than pay every six months. Your mortgage servicing company will pay your semi-annual tax bill.

  Bears podcast: Roquan Smith’s trade demand adds preseason drama

Special Assessments and Mello Roos: These additional charges will also appear on the property tax bill for the current homeowner. Check to see if they are fixed amounts or vary with the assessed value of the home.

Consider calling the phone number associated with the assessment to ask when it will be paid off. You may elect to take on the extra fee for a few years, knowing that it will go away in the future.

Homeowners association dues: Find out what the amount is and if there is a special assessment brewing to cover things like pool improvements, roof repairs or other large maintenance projects. You don’t want to be surprised at the last minute.

This should be part of your disclosures early in the escrow.

Homeowners’ insurance: You can estimate this cost by asking current homeowners what they pay or by calling your own insurance carrier. This is usually paid annually or semi-annually, and most mortgage companies require the first year to be paid through escrow. It will show up as one of the closing costs.

Utilities …read more

Source:: Los Angeles Daily News

(Visited 7 times, 1 visits today)

Leave a Reply

Your email address will not be published. Required fields are marked *