Math for Future Homeowners

by Albert Chen

We all sat in math classes where we thought to ourselves, "When am I EVER going to need to know this?" But this math class is different!

Today I want to teach you all the numbers you need to know when it comes to buying your next home.

First, you need to know what you're pre-approved for. This means talking with a lender where they'll ask you about your debt, your income, and they'll research your credit score. This sounds like a like but it's actually a quick process and these numbers are vital to the home-buying process.

Then you need to find out how much money you need to have saved to purchase a home.

Down Payment (This is NOT always 20% down like it used to be...in this market it's not uncommon to purchase a home with just 3.5% down). Talking with your lender early on in the process is key!

Home Inspection ($400-500)

Earnest Money (1-3% of the purchase price...your agent will be able to best advise you on this!)

Appraisal (Around $500)

Closing Costs (Some of the items I mentioned above are part of your closing costs but the total closing costs may vary and can be determined by your lender)

Taxes & Homeowner's Insurance (You can roll these right into your monthly payment instead of paying large lump sums every year)

I typically encourage my buyers to look a little UNDER their max budget given by their lender because I believe your home should be what allows you to live the kind of life you want. Not stretching yourself to thin is super important here!

BONUS TIP: Ask the sellers for an estimate of their monthly utilities before you write an offer to make sure you would still have some wiggle room to spend and save if you would buy it!