Affordability Is about More than Purchase Price

One common pitfall many first-time Boston condo buyers often fall into is misjudging how much they can really afford to spend. For singles, that can be especially problematic because they rely on just one income.

Assuming you have an annual salary of $52,988, zero debt, and $40,000 for a down payment, you could theoretically afford a $245,900 home if you got a 30-year loan at a rate of 3.39 percent, according to Realtor.com’s home affordability calculator. Your payments would come to approximately $1,224, including the principal and interest, taxes, homeowners’ insurance, and private mortgage insurance, leaving you with $3,192 a month to pay the rest of your bills, cover everyday expenses, and save.

That seems like plenty of money, but it can go relatively quickly if home ownership results in higher utility costs, or you’re spending more on transportation because you have a longer commute to work. You also have to factor in the added expense of things like maintenance and home repairs, which could put even more of a strain on your financial resources.

Your Down Payment Matters

Putting 20 percent down on a Boston condo is the generally accepted industry standard, but it is possible to buy a home with less cash out of pocket. An FHA loan, for instance, allows you to put down as little as 3.5 percent.

That’s tempting for first time homebueyrs who’s trying to keep short-term costs as low as possible, but it comes at a price. Taking on an FHA loan or a conventional loan with a down payment of less than 20 percent means paying private mortgage insurance (PMI), which drives up the cost of homebuying.

A Safety Net Is Vital

When you’re single, the burden of making sure you’re financially protected sits squarely on your shoulders. Buying a home adds a new dimension to that responsibility.

Singles need to be ready for the worst on multiple fronts. Buying a home warranty, for instance, can help with the cost of making certain repairs or replacing appliances during the first few years of home ownership. Disability insurance allows you to keep up with your mortgage payments if you get sidelined by an illness or injury. Life insurance can wipe out your mortgage debt altogether if you pass away.

Besides all that, single should also have a sizable emergency fund. If you don’t have a home warranty or it’s run out, having money on hand to deal with things like busted pipes or a leaky roof means you don’t have to resort to putting them on credit. An emergency fund also comes in handy if you get laid off and it takes a few months to land another job.

Knowledge Is Power

Nearly half of mortgage buyers don’t take the time to compare rates when getting a mortgage, and that can be a serious mistake for single women. A difference of even 0.25 percent in your mortgage rate can translate to thousands of dollars more you’ll spend on interest over the life of the loan. Shopping around for the best mortgage rates is a must.

Taking on an expensive loan or coming to the closing table with a tiny down payment can influence your financial outlook for years to come.

Conclusion

Moving somewhere means that you’re committing yourself to being neighbors with the folks who already live there. If you’re moving somewhere and still want to maintain an active dating life close to home, check out the city demographics to make sure that there are other single, like-minded people in your neighborhood.

If your thinking about buying a Boston condo please call our office and we can help you start your home search.

Author Profile

John Ford
John Ford
EXPERIENCE

Over the course of 20 years in the Boston downtown real estate market, John represented and sold numerous, condominiums, investment and development properties in Greater Boston and in the surrounding suburbs



In addition to representing Boston condo buyers and sellers, John is currently one of the most recognized Boston condo blog writers regarding Boston condominiums and residential real estate markets. John's insights and observations about the Boston condo market have been seen in a wide variety of the most established local & national media outlets including; Banker and Tradesman, Boston Magazine The Boston Globe, The Boston Herald and NewsWeek and Fortune magazine, among others.



HISTORY

For over 24 years, John Ford, of Ford Realty Inc., has been actively involved in the real estate industry. He started his career in commercial real estate with a national firm Spaulding & Slye and quickly realized that he had a passion for residential properties. In 1999, John entered the residential real estate market, and in 2000 John Started his own firm Ford Realty Inc. As a broker, his clients have come to love his fun, vivacious, and friendly attitude. He prides himself on bringing honesty and integrity to the entire home buying and selling process. In addition to helping buyers and sellers, he also works with rental clients. Whether you’re looking to purchase a new Boston condo or rent an apartment, you’ll quickly learn why John has a 97% closing rate.

AREAS COVERED

Back Bay

Beacon Hill

Charles River Park

Downtown/Midtown

North End

South End

Seaport District

South Boston

Waterfront

Brookline

Surrounding Communities of Boston
Contact
John Ford and his staff can be reached at 617-595-3712 or 617-720-5454. Please feel free to stop by John's Boston Beacon Hill office located at 137 Charles Street.




John Ford
Ford Realty Inc
137 Charles Street
Boston, Ma 02114

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