Here’s what going over budget will cost you in today’s market.
Let’s say you’re looking to buy a $200,000 home but, during your search, you see that a great-looking home has come on the market at $210,000. What would the difference in cost be between buying the $200,000 home and the $210,000 home?
That hypothetical was recently posed to me on my weekly Louisville Real Estate Radio Show that I host along with Kevin Distler of Pitt & Frank attorneys and Randy Raque of Swan Financial. In a normal credit score situation, meaning your credit score is around 720 and you’re paying private mortgage insurance because you can’t afford to put down 20% or more, you’re looking at paying $5.50 more per $1,000 (or $55 more per $10,000) each month by buying the $210,000 home. If you’re not paying private mortgage insurance, you’ll pay closer to $5 more per $1,000. If you have a lower credit score, you’re looking at paying $6 more per $1,000.
In other words, if you raise your purchase price by $10,000, your monthly mortgage payment increases by $55 to $60. If you’re only going up $1,000, you’re paying $5.50 or $6 more per month. If you were to go as high as $20,000 over your initial budget, you’d pay anywhere from $100 to $120 more per month.
So if you’re thinking about offering a little more for the home you really want, take this information into consideration. If you have more questions about budgeting for your mortgage or have any real estate needs, don’t hesitate to reach out to me. I’d love to help you.