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Easily Calculate House Payment

By Donna Edwards

Real Estate Broker/Owner with Donna Edwards Realty

June 26, 2012 08:45 AM

I recently had a buyer client who is looking to search for a home for sale in Odessa TX. She and her husband are in the process of getting qualified for a home loan. They have a good idea about how much they want to calculate their monthly house payment but are a little confused about how the price of the house will affect their overall payment. This is a very common concern when the house they really want is, for instance, $5,000 more than what they had thought they wanted to spend.

All of this is with the assumption that the buyer can afford a price they are considering; if not they need to get realistic and shop for a home within their means.

The truth is, sometimes it is actually cheaper for someone to purchase the “right” house for a few thousand more. In the big scheme of things it may be better to purchase a home that has been well maintained rather than making ongoing repairs left neglected by the previous owner.

It could be they save on the initial price but end up sending their child to private school because they didn’t buy in their favorite Ector County School. I told them you can easily calculate house payment while you search for a home. So I worked up the following scenario for them that they found extremely enlightening and has freed them up to make the right decision for them so I decided to share it.

At your price range and interest rate you can use this rule of thumb: for every $1,000 (+/-) in the price of the house (+/-) $6 to your payment. So a house that is $10,000 less you can expect to save $60 a month. $10,000 more you can expect to pay $60 additional a month.

The reason the difference is not large is because your payment doesn't only reflect what you paid toward the house but the bulk of your house paymentis interest, taxes, insurance, mortgage insurance ect...

With the above in mind, I like to translate that into objects you want vs what you can live without. In my family, $60 is a meal eating out. So if I want to eat out one more time a month, I need to look at a house $10,000 less. If I want to spend $10,000 more toward a house, I better be looking at eating dinner at home. For some the give and take may be something else such as dance lessons or deluxe cable or _____________ (fill in the blank).

Don’t get stuck on a set house payment but look at how your quality of daily life will be affected; after all buying a house is a long term commitment. Make It Your Own,

Donna Edwards is a broker associate of DeRiso & Haynes Realty, a highly regarded boutique firm of Odessa Realtors - selling more homes annually than any other firm in Odessa! For more information on how we can best serve your real estate needs, give her a call at 432.934.4439 or by email at donna@OdessaMidlandHomes.com . Also, check out what fabulous clients have to say on her testimonials page! OdessaMidlandHomes.com