Maricela Fernandez



The Best Homebuying Strategy

You don’t want to throw money away on rent anymore, do you? Instead, you can build an asset that can grow large if you handle your money wisely.

Your best strategy? Prepare financially now.

Down-payments under 20% of the home’s price spell risk for lenders. You’ll pay a higher interest rate as well as private mortgage insurance, about 0.5 to 1.0 percent of your mortgage. That’s about $2000 a year on a $200,000 mortgage or about $167 monthly.  

However, paying PMI allows you to get into a home faster with less money down, and an advantage in a desirable housing market.

The costs of homeownership.
According to The Motley Fool, you should prepare to pay about two to five percent of the transaction in closing costs. Afterward, expect to pay for maintenance and repairs, which average about 1% of your home’s value annually. Property taxes can be reassessed annually by multiplying your home’s value by the mill rate (percentage) for your county. Prepare for utilities to rise in winter and summer.

Debt management. 
Rutgers University economists suggest your monthly consumer debt service should be no higher than 10% of your net income or you’re moving into the danger zone. Divide your monthly consumer debt payments by your total net income to find your percentage.

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How much is your house worth?