When you first embark on your homebuying journey, you'll probably come across a mortgage calculator online. These tools can be incredibly helpful; after all, you don't want to go into a house purchase blind. Getting prepared for what your monthly payments will actually be is crucial to staying financially healthy throughout the purchasing process.
But even though these online calculators can give you wonderful insight into how much house you might be able to afford, they aren't always accurate. Features like a total mortgage cost estimation or a monthly payment calculation offer a good starting point. But unless you do your own calculations and research, you may find that you underestimated how big an investment your new house actually is.
The main purpose of a mortgage calculator is to tell you the principal and interest of your loan, the Consumer Finance Protection Bureau explained. The principal is the total amount that you borrow from a lender. The interest is a percentage of that amount - it's what your lender charges you for the loan.
The principal and interest make up a significant portion of the cost of homeownership, but there are other fees you'll likely need to take into account. Aside from the principal on a residential mortgage, other payments you may have to make include:
So, how much will these fees actually cost you?
According to Value Penguin, the average cost of homeowners insurance in 2017 is $952, or $79.31 per month. However, rates could be far more expensive (or, conversely, much cheaper) depending on where you live.
"The average cost of homeowners insurance in 2017 is $952."
The highest average rate in the country hails from Florida, where hurricanes and other natural disasters pose a fairly high risk to residents. The average cost in this state is $1,991, or $165.91 per month.
The lowest average rate is found in Idaho at $534, or $44.47 per month.
For a better idea of how much you might pay in homeowners insurance, talk to a few companies in your area. If you have auto insurance, start with that company. You might be able to get a good deal by bundling.
If you're able to make a down payment of 20% or more, you probably won't have to worry about PMI. The typical homebuyer finances 90% of a home purchase, meaning the down payment is 10%, according to the Profile of Home Buyers and Sellers report from the National Association of Realtors.
How much your PMI will be depends on a number of factors, including the price of your loan, your credit score and the type of loan you get, Interest.com noted. The typical range is between 0.2% and 1.5% of the cost of the loan. To get the best idea of how much you'll be charged, talk to your lender.
According to WalletHub, the typical American pays $2,127 on property taxes annually. But like homeowners insurance, property taxes largely depend on where you live. For example, for a $176,000 home in Hawaii, your property taxes might be closer to $489 per year - the lowest in the nation. Conversely, some of the highest rates can be found in New Jersey, where a home at the same price point will result in $4,029 in property taxes every year. For a closer estimate of what your taxes might be, check out some nearby listings - property taxes are usually included.
"The typical American pays $2,127 on property taxes annually."
Make sure you know whether you'll be required to pay HOA dues. These help maintain common amenities shared among all homeowners in the association, or among all condo or townhome owners in the complex, according to Investopedia. Usually, you can expect dues of between $200 and $400 per month, but it all depends on the particular home you're looking at. To get a more accurate picture of what you might pay, check out some listings in the neighborhoods you're exploring, CFPB suggested.
If you're in the market to buy a house, you'll want to make sure you know just how much house you can really afford. Talk to the lenders at Academy Mortgage to get a good idea of what sorts of mortgages and rates you qualify for.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2015 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.