Separate from the monthly mortgage bill, would-be home buyers have to factor in numerous costs to determine their affordability comfort level, financial counselors say. Some of the considerations:
Property taxes. "For real estate taxes in the Chicago metropolitan area, I use 2 percent of the home's sales price," said Lynnette Briggs, a counselor for the DuPage Homeownership Center in
. Of course, she says, that will vary by county and municipality, but she finds the 2 percent guideline comes "darned close."
Utilities. "Sometimes you end up truly guessing," said Briggs, who suggests contacting local service providers about average usage costs. She also said many real estate agents will help their buyers with that research.
Homeowner's association fees. Get hard numbers for fees, services they include and what an association holds in reserve for emergencies, the counselors say. Such fees can range from a few dollars a year to hundreds per month, depending on the service provided.
"Sometimes the fees include cable television and utilities, but generally not electricity for lights," Briggs said. "Some also include insurance for the common elements of the condo building or development or even insurance for the actual unit."
Insurance. "Your agent should be able to give you a guesstimate for homeowner's insurance based on the type of structure it is and what kind of coverage you want," Briggs said. She said some buyers might also need to consider flood insurance or mortgage insurance if their down payment is less than 20 percent of the purchase price.
Briggs said that one upside to the slowdown in the housing market is that buyers generally have more time to calculate the costs of their purchase.
She says first-time buyers can get a grip on the process through free classes and counseling offered by HUD-certified housing agencies throughout the Chicago area. A list is available at