That was the average mortgage payment in May. Would it blow your budget?

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It may be out of reach for many people.


Key points

  • Different factors determine the amount of your mortgage payment, such as the price of your home, your down payment and your mortgage rate.
  • The average monthly mortgage payment rose in May to $1,897.
  • When shopping for a mortgage, calculate the numbers first to make sure you can afford it for the long term.

It’s no secret that housing is becoming less and less affordable. And when you look at the state of the housing market, it’s easy to see why.

Home prices have spiked for many months, largely due to a critical shortage of housing inventory. But that’s not all.

Since the start of the year, mortgage rates have been on the rise, and at one point in June the average 30-year mortgage rate passed the 6% mark. Now, to be fair, this is by no means the most expensive mortgage ever. But the fares we’ve seen recently are the most expensive in over a decade.

Because house prices are rising and mortgage rates are less competitive than they were at the start of the year, mortgage seekers are signing up for higher monthly housing payments. And for many people, the typical mortgage payment in May may be financially out of reach.

It’s not a small number

According to the Mortgage Bankers Association, in May the national median mortgage payment that mortgage applicants signed up for was $1,897. Now that’s comparable to what borrowers signed up for in April. But in March, that figure was well below $1,736.

All told, homes are becoming harder to afford, especially considering that rising property values ​​can also lead to higher property tax bills. Property taxes are based on the assessed values ​​of homes, so the higher these numbers, the greater the tax burden can be.

Can you afford to buy a house today?

The amount of money you end up spending on a mortgage payment will depend on a number of factors. These include:

  • The purchase price of your home
  • The amount of your deposit
  • The interest rate you manage to get on a mortgage

There are steps you can take to lower your mortgage payments, such as improving your credit score to get a more affordable mortgage rate or saving extra money for a bigger down payment. Opting for a 30-year mortgage will also result in lower monthly payments than a shorter-term loan, such as a 15- or 20-year mortgage.

But ultimately, you’ll need to make sure your total housing costs don’t exceed 30% of your take-home pay. And that doesn’t just mean your mortgage payment. Instead, it should include predictable monthly housing-related expenses, such as property taxes, homeowners insurance, and HOA fees, if these apply to the home you’re considering.

It’s important to calculate these numbers and see how much house your paycheck allows you. You may end up with a monthly mortgage payment over $1,897, but if you can afford it and are comfortable with the expense, go for it. Or maybe you need to limit your monthly mortgage payment to $1,550 because of your income.

It’s helpful to track mortgage payment data to get an idea of ​​what’s to come. But at the end of the day, many variables will come into play in determining how much you end up spending monthly on a home. And his really important to make sure that the number you sign up for is the one that suits you financially.

The Best Mortgage Lender in Ascent in 2022

Mortgage rates are rising – and fast. But they are still relatively low by historical standards. So if you want to take advantage of rates before they get too high, you’ll want to find a lender who can help you get the best rate possible.

This is where Better Mortgage comes in.

You can get pre-approved in as little as 3 minutes, without a credit check, and lock in your rate at any time. Another plus? They do not charge origination or lender fees (which can reach 2% of the loan amount for some lenders).

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