Getting back to my 3 step plan, I’ll elaborate more on our money saving goal and why that amount. But first, it’s important to understand how we came up with our house budget without going house-broke.
We originally set our house budget at $200,000. However, after numerous RedFin searches, we recognized this was not realistic. There weren’t any homes at this price. So, we revised our budget to $250,000, give or take $10,000. This is completely do-able if the plan goes down like this:
- Save at least $20,000
- Find a home for $250,000 that’s not completely falling down
- Finance $230,000 at no more than 6.2% interest rate
- Monthly mortgage = $1410
- Monthly property tax = $313 (1.5% of cost of house)
- Property insurance = $150 (this is an estimate)
- Total monthly cost = $1873 (only $73 more than our current rent)
I used Bankrate’s mortgage calculator to help figure out our mortgage amount:
Michael Bluejay’s calculator is a little more detailed, he estimates what you can afford:
The down payment, or how much we can save, will affect how much of a house we can afford. The less we have saved, the less we can afford and there are not many houses available in the low $200,000’s.
