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Intro to "What Is the Home Value You Could Afford?"


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Calculate the initial costs and monthly expenses of purchasing a house

What Is the Home Value You Could Afford? We often think that buying a house only involves replacing the rent with the mortgage payments. This is far from the truth; considerable expenses, other than the mortgage payment, are added when purchasing a house. It is highly recommended to plan a budget before engaging yourself into buying a property.

When you buy a home, you have to take into consideration the initial costs. First, financial institutions always ask for a cash down when applying for a mortgage loan. Banks finance normally from 80% to 95% of the house value, so the 5% to 20% needs to be paid by the borrower, which involves a cash down on the mortgage balance of at least five digits. On top of this are added the notary fees, the transfer tax and the inspection fees.

When a buyer moves in a new residence, they frequently plan for renovations, repairs and furnish it with new furniture, appliances, beds and other accessories. All this should be included in the initial cost. You then realize that, from the beginning, you need to have a considerable amount of savings before even starting to cover the monthly expenses.

New monthly expenses, not present when renting, are added to the mortgage payment when you become a home owner. Property taxes such as municipal and school taxes must be included in your budget, and if it’s a condo, you will need to add the condo fees as well. Also, it is essential to get insurance in order to protect your real estate investment.

Finally, since you are now a homeowner, you are responsible for the property’s maintenance. This implies cost of repairs and other unexpected expenses. It is always safe to budget a monthly payment for maintenance, repairs and unexpected expenses, because they always come up when you least expect it.


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Numbers in our calculators are rounded to two decimals.
The same calculations made in an Excel spreadsheet may differ slightly.

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