With the real estate market growing stronger, you may be considering buying your own home. Buying your house is probably going to be the largest purchase you will ever make, so it’s not something to take lightly. If you are currently renting a home or apartment, and you can comfortably afford your rent, then you may think that you can afford a mortgage with the same monthly payment. That’s a common misconception, but there is more to home buying than just the monthly mortgage payment. Before you start looking for a home of your own, you need to know if you can afford the costs of ownership.

1. How to Know You Can Afford Your
Own Home
With the real estate market growing stronger, you may be considering buying
your own home. Buying your house is probably going to be the largest purchase
you will ever make, so it’s not something to take lightly. If you are currently
renting a home or apartment, and you can comfortably afford your rent, then
you may think that you can afford a mortgage with the same monthly payment.
That’s a common misconception, but there is more to home buying than just the
monthly mortgage payment. Before you start looking for a home of your own,
you need to know if you can afford the costs of ownership.
DOWN PAYMENT AND PRIVATE MORTGAGE INSURANCE
When you buy a home, you need to make sure that you have the money for the
buying process. Many lenders require a 20 percent down payment, and if you
don’t have that amount, they require Private Mortgage Insurance(PMI). PMI
protects the lender if you default on the mortgage, but you’re paying for that
protection. On average, PMI adds between 40 and 60 dollars per month for every
100,000 dollars financed.

2. PROPERTY TAXES
Many states and local governments require home owners to pay property taxes
either annually or semi-annually. The taxes are often divided up into your
mortgage payments, and they can change over time, based on the yearly
assessment by the county of residence and increases or decreases in tax
percentages. After interest fees, property taxes are usually the highest cost of
owning a house.
HOME INSURANCE
When you buy your home, you have to have homeowner’s insurance in order to
get a mortgage approved. While there are many options available, your policy
needs to cover the cost to rebuild your house and replace the contents.
The average yearly house insurance is an additional 80 dollars a month. The value
of your home, the likelihood of natural disaster, and other variables can affect
that rate significantly.
REPAIRS AND UPKEEP
Repairs and maintenance play a large role in the cost of home ownership. Even if
you can pay the mortgage, PMI, taxes, and insurance, you also have to factor in
that nearly everything in a house will need to be repaired or replaced. It is
incredibly important that, as a homeowner, you can factor savings into your
budget for both emergencies such as a broken furnace, or a large replacement,
such as a roof.
Euguene Schneur is a real estate mogul and the co-founder of Omni New York.