There is a list of factors, including ongoing and upfront costs, you need to consider when buying a house in Denver. Read on to find out how much you can afford to spend on a Denver house.
Denver house
Aerial view of a house
Since 2017, the house value in Denver has been rising steadily and the market shows no signs of cooling down any time soon. Despite the low affordability of the housing, buyers are jumping onto Denver’s real estate bandwagon. However, before you make a buying decision, you need to find out the reasonable cost range for a house in Denver.
Here is a list of factors, including ongoing and upfront costs, you need to consider when buying a house in Denver.
Upfront Costs
Naturally, the first thing you need to consider is whether you have enough savings for the upfront cost associated with buying a house in Denver.
Down Payment
Your biggest chunk of money will go towards making the down payment. The standard down payment with a conventional loan is about 20 percent of the buying price. However, you may be able to get a loan from the Federal Housing Administration (FHA) for as little as 3.5% down payment. Veterans may be qualified to get a VA loan for no won payment.
You can consider all your loan options from www.realtyonegroupfivestar.com and find the one that suits you the best!
Closing Cost
Colorado closing costs can typically cost anywhere between 3 to 5 percent of the purchase price. These include a variety of expenses like loan origination fee, inspection fee, property appraisal fee, and courier services.
Repair Cost
Prospective buyers should also calculate the cost of repairs and renovation. If your home is recently made or has no major issues, this cost could be $0.
Moving Cost
Although your moving cost may seem minuscule as compared to the cost of buying a house, factoring it into your budget can prevent you from an unnecessary headache later on.
Ongoing Cost
After making the upfront cost, you will need to have a monthly cash flow to pay for your homeownership.
Mortgage Payment
Your mortgage payment consists of your monthly payment of the principal balance as well as the interest accrued. There are several factors that are accountable for the mortgage including the full amount of your loan, your loan term, and the rate of interest.
Your interest rate can be lowered if you have a good credit history and your monthly payment can become more affordable if you choose a longer term.
Property Taxes
Property tax is calculated by determining the assessed value of the house and applying a mill levy to it. Fortunately, Colorado homeowners enjoy low property taxes and an average homeowner in Denver pays about $127.5 monthly in property taxes. In fact, Denver mortgage companies also add property tax into your monthly mortgage amount and pay the taxes on your behalf.
Homeowner Insurance
Colorado homeowners pay an average of $115.25 monthly on homeowner’s insurance premiums. Mortgage companies also add this amount to your monthly mortgage and pay it on your behalf.
Private Mortgage Insurance (PMI)
PMI is a special insurance policy only levied on those homeowners whose down payment is less than 20% of the purchase price. This helps lenders counterbalance the risks in lending you such a big percentage of the property value. PMI rates can vary between 0.2 to 2%, depending on the amount of down payment, credit score, and loan term.
Maintenance
Denver homeowners should also consider setting aside at least 5 percent of their monthly mortgage payment for monthly home maintenance.
To truly enjoy the experience of being a homeowner, you need to look for a house that you can afford comfortably. Calculate the amount you can comfortably afford by multiplying your pre-tax monthly income by 0.31 percent. The product will indicate the amount you can afford to spend on your ongoing house cost.
If you are still not sure how to buy a home for the first time, don’t hesitate to talk to www.realtyonegroupfivestar.com first!
