Michael Holigan: When you start looking to buy a home, how do you know how much home you can afford? Your price range depends not just on the down payment, but on your monthly payments.
Angela Slatinsky: It was kind of a mathematical deal that I did, as far as what my bills were, what I could afford, what was left over.
M.H.: Angela Slatinsky is a single parent raising two teenage boys. She wanted a house large enough to provide ample living space but not one with large payments. As a working mother, she didn't want to be financially strapped. To find here comfort level, Angela grabbed a calculator and did some math.
A.S.: We wrote down all of my bills, we wrote down how much money I have coming in, and kind of sat there and just crunched numbers to see where we fell into and what I was comfortable with.
M.H.: As a rule, your monthly payments should not exceed 1/3 of your total gross income. But monthly payments are more than principle and interest, and those additional bills can add up. A $95,000 loan at 8% interest will mean payments of $697 each month over 30 years. Sounds pretty good, right? Now add homeowners insurance, which protects the lenders investment. That's about $40 a month. The lender also requires mortgage insurance in case you default on the loan. That can run you about $60 a month. Now comes city, school and county taxes, which the lender also escrows. At a rate of 1.3%, that's another $100 a month. Your total monthly payment is now $897. Homeowners like Angela think it's great to live in a big, beautiful house, but they know, after your house payment, you still have to put food on the table. If you plan ahead, you can do both.
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Episode 32 1996 - 97 Season
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