Calculating the Cost of a Home

Many young people would like to purchase a home of their own but are not sure if they can afford one. Housing costs vary significantly depending upon region. In 2006, the National Association of Realtors reported the median price of a home is $225,000 in metro areas. Since that’s the median price, there are homes available for much less and much more. California has some of the most expensive housing, whereas Arkansas and West Virginia have the least. It is important to look into averages costs in your particular area.

One can count on having monthly payments between .75% and 1.15% of the purchase price of a home. Therefore, if you purchase a home for $150,000, you should expect to pay between $1,125 and $1,725 a month. Included in this price are taxes and insurance. If a larger down payment is placed on the home, one can expect a smaller monthly payment. In addition, lower monthly payments have lower interest rates. Although longer-term loans will have smaller monthly payments, because of interest, they end up being more costly. Therefore, it is best to pay off a mortgage as soon as possible. If you need assistance with your monthly amount, one option would be to consider renting out a room in your house to provide extra income.

When calculating the cost of a home, be sure to include a down payment, closing costs, and any other miscellaneous costs such as homeowner’s association fees.

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