MONTHLY PAYMENTS
Michael Holigan: Calculating what size house payment you can afford may seem mystifying, but if you can add a few key numbers you can figure it out. Glen DeWolf wanted to be sure his family could afford their new home.
Glen DeWolf: Well, my wife and I just sat down and kind of went through our budget figuring out what our monthly bills were and how much she made and how much I made a month and how much we felt comfortable not overextending ourselves.
MH: But your mortgage payment is not just the price of the house plus interest. It also includes your escrow accounts. At the top of the list - taxes. There are school, city, county and in some places state taxes. Taxes vary widely depending on where you live. A good ballpark figure is $100-200 a month on $100,000 home. Then there's insurance. Homeowner's insurance protects you. That runs about $20-35 monthly, depending on your coverage. If your downpayment is less than 20% you'll also pay mortgage insurance. That protects the lender and costs about $40-50 a month. All total on that $100,000 home at 7 1/2 % interest, escrow hikes the payment from $699 a month to approximately $850-950 a month. Even though your monthly payments go up escrows can be a big help. You don't have to come up with that big check at the end of the year for taxes or insurance if you've been escrowing the money monthly. So Glen sat down at his computer to do the math. He added in living expenses like food and entertainment plus savings. The payments he figured allowed the DeWolfs to buy a home they're crazy about and can afford.
GD: We love it. We've enjoyed it the day we moved in. Nothing like owning your own home.
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Episode 59 1997 - 98 Season
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