How to buy more house & stay within your monthly budget

By
Mortgage and Lending with Ruoff Home Mortgage 234777

If you are like most home buyers who begin their Warsaw, Indiana home search, you start by deciding “How much house” you can afford on a monthly payment basis. Once you have arrived at that figure, you can then calculate how much the overall price needs to be in order to stay within budget.

Unless you are putting down 20% or more of the purchase price there are normally 4 costs within your monthly mortgage payment. Those 4 costs are:

  1. The principle & interest portion of your loan payment
  2. Your homeowners insurance
  3. Your property taxes
  4. Your monthly mortgage insurance premium

Most people have heard of the “dreaded” mortgage insurance (MI), commonly referred to as PMI or private mortgage insurance. But were you aware that you can pay an upfront single premium mortgage insurance and be done with MI for the life of your loan?

The upfront mortgage insurance premium can be paid upfront by you, by the lender or even negotiated into your purchase as a seller paid concession. In certain instances, the premium can even be financed into the loan.

I know what you’re thinking: “It must be more expensive, right?”  Not at all! As a general rule the cost of single premium mortgage insurance is equal to only 30 months of the monthly premium would be.

Example: A $150,000 loan on a purchase with 5% down would normally have a monthly mortgage insurance premium of $74 for approximately 12 years. Brace yourself! That would amount to over $10,000 in mortgage insurance premiums over those 12 years. Alternatively, an upfront single premium would be only $2,175, a savings of over $7,500!

Without this cost added to your monthly payment, you could get a lot “more house” or a shorter term on your loan.

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Greg Miller   
Mortgage Loan Originator 
NMLS # 234777
www.Ruoff.com
gregm@ruoff.com

941-552-9989


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Rainmaker
2,331,898
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Lots of great advice, it certainly shows your knowledge about doing good work for your borrowers.

Jun 06, 2013 11:50 AM #1
Ambassador
2,209,233
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

This is a great and informative post for home buyers. I hit the suggest button. 

Mar 03, 2014 08:44 AM #2
Rainmaker
171,688
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Thank you for the kind words Debbie.

Mar 03, 2014 09:22 AM #3
Rainmaker
2,746,434
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Great tips for homebuyers.  I like the suggestion about trying to pay the mortgage insurance up front in a lump sum.  I hadn't considered that before.

Mar 03, 2014 11:03 AM #4
Rainmaker
2,855,287
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher
Buy more house for your spouse. My little rhyme LOL! He looks all the buyers and sellers and thank God for good markets! Love and light, Laura
Mar 03, 2014 01:05 PM #5
Rainer
166,083
Mark Skibowski
and Vacation Homes ~ RE/MAX Lakes Realtors - Warsaw, IN
Warsaw, Winona Lake, and Kosciusko County Homes. L
Great suggestions and thinking outside the box! Thanks for sharing.
Mar 03, 2014 06:02 PM #6
Rainmaker
171,688
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Laura- Nice little rhyme & thanks for commenting.

Mark- As you know, there are so many little ways that can help put a mortgage together. Thanks for commenting.

Mar 03, 2014 07:25 PM #7
Rainmaker
1,405,827
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Greg, a good tip and a huge savings when buying the PMI up front. Thanks.

Mar 03, 2014 10:00 PM #8
Rainmaker
1,995,692
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Excellent round up to explain the process. How it works, what it is all about.

Mar 04, 2014 01:10 AM #9
Rainmaker
3,024,690
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Greg - Thank you for the very good information about how to buy more house stay within monthly budget.

Mar 04, 2014 05:36 AM #11
Rainmaker
171,688
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Thanks for the kind words guys. 

Mar 04, 2014 07:05 AM #12
Rainmaker
1,506,461
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Calabasas CA

It is one of the options/questions to consider while choosing a loan officer to work with. How experienced this person is.

Jun 15, 2014 03:43 AM #13
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Rainmaker
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Greg Miller

Florida Home Loans - Conventional,FHA,USDA,VA
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