How Much can I Afford to Pay for a Scottsdale Condo or Townhome?

Before you start your condo or townhome search, you’ll want to objectively determine how much you can afford to pay each month. When calculating your monthly payment, you’ll need to include not only your principal and interest, but also homeowner’s fees, taxes and insurance. Here’s a quick synopsis of what your monthly payment includes:

Principal and Interest: The Principal is the amount of your mortgage payment that actually pays down the loan. It starts out as a smaller amount of your mortgage payment and increases as the loan balance is paid off. Interest is the amount you pay the bank for giving you the loan. In most cases you should be able to deduct your interest payment on your income tax return – a key advantage to home ownership.

Homeowner Association Fees (HOA fees): Every condo and townhome community has a homeowner’s association, which is the governing body that is charged with caring for the common areas of the community. In most condos, that means not only the community pool and community landscaping, but also the outside of the buildings. They’ll paint, repair the roof (check whether the roof is included if you are considering a townhome), re-surface the parking areas, and mow the grass. In return, the community association charges homeowners a fee for these services and potentially for water, sewer and garbage as well. Homeowner’s Association Fees (HOA fees) vary depending upon what is covered and how many people are paying for that coverage, but usually range from $150 - $250 per month.

Taxes: County taxes are assessed on properties, whether they are homes, townhomes or condominiums. Your lender will often insist on collecting a portion of that tax in your monthly payment, so that the money will be available at the time taxes are due (twice a year). Lenders are very interested in paying that tax, and will in most cases pay it for you. If taxes are not paid, the property could potentially go into foreclosure.

Insurance: Condominium insurance usually is needed on the interior, contents and liability. Since the HOA fee usually covers the outside of the condominium, condominium insurance is very affordable. If you are looking at a townhome or patio home, check with your agent and examine the HOA documents to find out what is covered by the Homeowners Association and what you will buy insurance for.

Your Monthly Payment

To get an exact monthly payment, have your real estate agent and mortgage professional help you determine what you’ll pay for principal, interest, insurance, taxes and HOA fees. Here is a basic scenario for a buyer with a 20% down payment on a $220,000 Scottsdale condo:

Home price:	$220,000
Assumed Down payment:	20%, or $176,000
Assumed interest rate:	6%
Assumed loan:	30 year fixed principal and interest (this is the most conservative loan type)
Principal & Interest payment:	$1055 per month
Typical HOA:	$180 per month
Typical taxes:	$100 per month
Insurance:	$30 per month
Monthly payment:	$1365 per month

You can plug your own numbers into a mortgage calculator here or at www.UnderstandingHomeLoans.com , but when it comes time to get an exact calculation, you’ll want to ask your real estate agent and lender for more specific interest rates, HOA fees and taxes. Consult your insurance professional for insurance payment specifics.

 

 

Information Deemed Reliable But Not Guaranteed. The Fair Housing Act prohibits discrimination in housing based on color, race, religion, national origin, sex, familial status, or disability.