When it comes to figuring out how to begin up the path to homeownership, St. Cloud renters are left pretty much to their own devices. For the majority of first-time buyers who will use home loan financing to get there, getting started is simple enough: you begin by knowing two basic numbers.
The firstis the amount of money you will be comfortable spending for housing each month. This is a figure that will cover your mortgage payment, upkeep, insurance, and property taxes—everything your St. Cloud house will cost on a month-to-month basis. But you don’t have to worry about calculating those elements in advance; to start, you only need to know that single total.
Estimating it is easier than you might think. Renters already know what they pay in rent each month. That’s usually their total housing budget—so they can simply expand on that already-known number. It’s a question of being realistic about how much more could be devoted to the category without causing undue stress and strain. There are two wrinkles that can boost the figure:
a)Savings. For all but interest-only home loans, monthly mortgage payments include a pay-down of the principal—the remainder owed. Owning your St. Cloud home means building equity in it. If you are already a regular saver, it’s realistic to consider that a portion of what you regularly put aside can now be considered a home equity-building form of saving. You can realistically add that amount to your housing budget.
b)The tax bonus. Income tax rules govern how much of the interest portion of monthly mortgage payments is deductible at tax time. For mortgage amounts up to $750,000, it’s 100%! The reduction in tax dollars spent can be added to your housing budget figure.
The second number is the amount of cash you can make available for a down payment. For most first-time buyers, even thinking about this figure can halt the whole project—particularly for those who have been led to believe that home loan down payments require a minimum of 15% to 20%. The amount available may go further than you’d think—especially considering that last year’s average down payment for the majority of first-time homebuyers was zero to 6%! In that department, I can help point clients to resources and special programs available for many of today’s home buyers.
Give me a call once you have calculated your two basic figures—we’ll see how far they will carry you in today’s St. Cloud market!
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