Before you start searching for your dream home, you first need to determine a price range you can afford. According to the Federal Housing Administration (FHA), depending on the consumer’s current debt ratio, most people can typically afford to pay 31 percent of their gross monthly income for mortgage payments. For example, if you earn $50,000 annually, then your monthly income is about $4,167. Thirty-one percent of that is $1,292.
There are several online tools to calculate a monthly mortgage you can afford using factors such as your current monthly expenses, down payment and the interest rate. You can also work with a lender to get pre-qualified for a loan. This estimate will help you gauge how much money you may be able to borrow and the monthly mortgage payments.
However, the amount you are able to afford for a home loan should not be your only consideration for determining your price range. With homeownership come other housing expenses.
Utilities
The most obvious of additional housing expenses are utilities—gas, electricity and water. But don't forget about telephone, trash collection, and cable or satellite bills.
Taxes
As a property owner, you are responsible for property taxes. The rate will vary from city to city. In our community, the tax rate is (insert %) percent. That means for a home with a market value of $200,000, yearly taxes will run (insert dollar amount). To get a general idea on how much the tax bill will be for a property, ask the seller for a copy of the previous year's tax assessment. Your real estate professional can help you refine these figures.
Association Dues
Another cost you may incur is homeowner association (HOA) dues. Most condominiums and some (residential developments/subdivisions/neighborhoods) have HOAs, which are legal entities, created to maintain common areas and enforce deed restrictions. As a property owner, you are required to pay the established monthly or annual homeowner association dues. Be sure you factor this cost into your budget.
Maintenance
You also need to consider the upkeep of your home. You should budget for seasonal maintenance such as lawn care, pest inspections and carpet cleaning, as well as unexpected repairs. The amount you budget will depend on the age of the home, as older homes tend to require more repairs such as installing a new roof, painting and replacing older appliances.
Insurance
Depending on the type of coverage and your area, the costs for homeowners insurance each year can be anywhere from a few hundred to thousands of dollars. And, if you live in an area that has high risks for flooding, earthquakes, hurricanes, etc., you may need supplemental insurance.
Remodeling/Upgrades
Unless the home you purchase is picture perfect, you’ll more than likely be adding your personal touch. Therefore, you need add to your housing budget the costs for remodeling and upgrades. According to “Remodeling Magazine’s” 2007 Cost vs. Value Report, the national average for a midrange minor kitchen remodel is $21,185; a bathroom remodel averages $15,789.
Even minor cosmetic fix-ups such as light fixtures, window treatments, carpeting and decorative cabinet knobs can begin to add up.
By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget.
Tuesday, May 20, 2008
Wednesday, May 14, 2008
May News
Real Estate News from your Chicago Real Estate Agent - Ramona Sivulich
May Is Check-Your-Deck Month
When spring is in the air, buds begin to unfurl their bloom, bees buzz for honey, and birds sing enthusiastically. It's only natural that our thoughts turn to enjoying the great outdoors and our decks.May is Deck Safety Month, first rolled out in May 2006 to make sure that you or your loved ones don't get, well, decked by your deck.More than 92 million homes in the United States have a porch, deck, balcony or patio, and experts say that an astonishing 20 million of them are in need of immediate replacement or repair.The association says between August 2004 and December 2005, the U.S. news media reported 225 injuries and one fatality from deck collapses. Many more deck failures -- with and without injuries -- went unreported.Simpson reports that the average life expectancy of a deck is 10 to 15 years and requires frequent inspection.A qualified inspector should give your deck the once over to evaluate its safety and construction and to be certain it is structurally sound and properly maintained.Excerpts reprinted with permission of Realty Times.
Warning signs your deck may be about to give way
Rotted, split or decaying wood. Typically found where the deck attaches to the home, in support posts and joists under the deck, in deck boards, railings and stairs. Rotted, split or decaying wood weakens the structure and raises the possibility of collapse. Keep in mind, wood naturally cracks with age, but a deck with cracks throughout or large cracks in portions indicates major weakness.
Missing, loose or corroded fasteners and connections. Decks should have a redundant system of nails, screws, connectors, anchors and fasteners supporting the structure. Look for loose and missing parts, rust, a shaky handrail and stairs that sway or sag.
May Is Check-Your-Deck Month
When spring is in the air, buds begin to unfurl their bloom, bees buzz for honey, and birds sing enthusiastically. It's only natural that our thoughts turn to enjoying the great outdoors and our decks.May is Deck Safety Month, first rolled out in May 2006 to make sure that you or your loved ones don't get, well, decked by your deck.More than 92 million homes in the United States have a porch, deck, balcony or patio, and experts say that an astonishing 20 million of them are in need of immediate replacement or repair.The association says between August 2004 and December 2005, the U.S. news media reported 225 injuries and one fatality from deck collapses. Many more deck failures -- with and without injuries -- went unreported.Simpson reports that the average life expectancy of a deck is 10 to 15 years and requires frequent inspection.A qualified inspector should give your deck the once over to evaluate its safety and construction and to be certain it is structurally sound and properly maintained.Excerpts reprinted with permission of Realty Times.
Warning signs your deck may be about to give way
Rotted, split or decaying wood. Typically found where the deck attaches to the home, in support posts and joists under the deck, in deck boards, railings and stairs. Rotted, split or decaying wood weakens the structure and raises the possibility of collapse. Keep in mind, wood naturally cracks with age, but a deck with cracks throughout or large cracks in portions indicates major weakness.
Missing, loose or corroded fasteners and connections. Decks should have a redundant system of nails, screws, connectors, anchors and fasteners supporting the structure. Look for loose and missing parts, rust, a shaky handrail and stairs that sway or sag.
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