San Diego Condos and home ownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.
Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for San Diego condos or home based on your financial and personal goals.
Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage? What about that tropical vacation you want to go on? Maybe that new Cannondale Mountain Bike you’ve been looking at?
Still not sure how much you can afford? You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford
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The mortgage overall affordability in general rule of thumb is- one can afford a San Diego Condos or home two or three times their income. If you make $ 100,000 you can usually buy a house between 200,000 and $ 300,000. To understand how this rule applies to your individual financial situation, prepare a family budget and a list of all costs of San Diego Condos or home ownership, including property taxes, insurance, maintenance, utilities and expenses of the Home Owners Association (HOA) in if any.
Down payment factor- how much money do you have for down payment? The higher your down payment, the lower your monthly payment will be. If you deposit at least 20% of the cost of the house, chances are won’t have to obtain private mortgage insurance, which could cost as much as a few hundred extra a month. By avoiding mortgage insurance you’ll have more money for your mortgage payment. By putting 20% down you can also avoid the pitfalls of a low owner occupancy rate in a San Diego condos complex.
The lower the amount of down payment one puts down the higher your monthly mortgage payment. Think about your third of the total debt, Lenders generally follow the 28/41 rule. Your monthly mortgage payment, which covers your original principal, interest, taxes and insurance (PITI) should not total more than 28% of your gross annual income. Your total monthly payments on your mortgage and all your other bills, such as auto loans, utilities and credit cards should not exceed 41% of your gross annual income.
Here’s how it works – If your gross annual income is $ 100,000, multiplied by 28%, then dividing by 12 months to reach a monthly mortgage payment of $ 2,333 or less. Then check the sum of all your monthly bills including your mortgage potential and ensure they are not top 41% or $ 3.416 in our example
Use your own rent as a guide to calculate the tax benefits of San Diego condos or home. Ownership usually gives you the opportunity to make a mortgage payment, including taxes and insurance, about one third larger than your current rent without changing your lifestyle. Thus, you can multiply your current rent of 1.33 to arrive at a rough estimate of a mortgage payment. Here is an example. If you are currently paying $ 1,500 a month rent, you should be able to comfortably pay a monthly mortgage payment of $ 2,000 after taking into account the tax advantages of home ownership. But if you’re struggling with paying your rent, you might consider what amount would be comfortable with. Also if you itemize your deductions, you can also deduct the mortgage interest.
Talking to your tax consultant, or using a tax software programs such as Turbo tax or Quicken you can generate a “what if” tax return, can help you see your tax situation more clearly.
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