One of the easiest mistakes to make when shopping for a home is focusing on the purchase price instead of the monthly payment.

A $450,000 house is a $450,000 house, right?

Not necessarily when it comes to what it costs you each month.

Two homes with the exact same sales price can have noticeably different monthly payments. Property taxes, homeowners insurance, HOA dues, mortgage insurance and even the type of financing can change the numbers more than buyers sometimes expect.

The Sales Price Is Only One Piece

When I’m helping someone determine what they can comfortably afford, I don’t want to stop at the principal and interest payment.

We need to look at the whole picture.

Property taxes can vary significantly from one neighborhood to another. The same is true for homeowners insurance. One property may have an HOA while another doesn’t. Depending on the loan and down payment, mortgage insurance may also be part of the payment.

That means a slightly more expensive home could potentially have a similar monthly payment to a less expensive home with higher taxes, insurance or HOA costs.

This is why I would rather run the numbers on the actual property than have a buyer automatically rule a house in or out based solely on the listing price.

Property Taxes Can Make a Big Difference

This is especially important in Texas.

Tax rates can vary by location, and newer communities may also have additional assessments that need to be considered. When you’re comparing homes, looking only at the sales price can give you an incomplete picture of affordability.

The question isn’t simply, “How much does this house cost?”

It’s, “What does this particular house cost me each month?”

Those are two very different questions.

Homeowners Insurance Matters Too

Insurance is another number buyers sometimes underestimate.

The cost can vary based on the property itself, its location, coverage and several other factors. Because homeowners insurance is typically included in the monthly mortgage payment when taxes and insurance are escrowed, a difference in the annual premium changes the monthly payment too.

This is another reason I don’t like using one generic estimate for every house someone is considering.

Then There’s the HOA

An HOA payment may seem relatively small when you see the annual amount on a listing, but it still needs to be included when looking at your total housing expense.

For example, an HOA of $1,200 per year is effectively another $100 per month in your housing budget.

It doesn’t mean the house is a bad choice. It simply means we need to account for it.

Compare Homes by Payment, Not Just Price

When my buyers narrow their search to a few homes, I can compare the numbers side by side.

Sometimes the results are exactly what they expected. Sometimes they’re surprised.

And that information can help you make a much better decision before you write an offer.

The goal isn’t necessarily to find the cheapest house or even the lowest payment. It’s to understand what you’re actually buying and what that choice looks like in your monthly budget.

Before you eliminate a house because you think it’s too expensive, or fall in love with one because the price looks perfect, let’s talk. We can look at the numbers that actually matter.

Collette Horton
Liberty Star Mortgage
A Branch of SecurityNational Mortgage Company
NMLS 3116 | NMLS 290357