Think owning a home will bring surprise expenses that wreck your budget? This episode breaks down exactly what you’ll pay—and why it’s not as scary as you’ve heard.
Synopsis:
In this myth-busting continuation of the 20 Most Frequently Asked Questions, David Sidoni tackles one of the biggest fears holding renters back: hidden costs. From rising property taxes and insurance to repairs and HOAs, David exposes the truth behind these so-called “surprises” and shows how proper planning makes them predictable. If you’ve been scared off by online horror stories or clickbait headlines, this episode gives you the clarity and confidence to stop renting and start planning. You’ll walk away with real numbers, smart strategies, and a clear-eyed understanding of how homeownership costs actually work.
Promise Delivered:
You’ll learn how to predict and plan for every cost of homeownership—so nothing feels “hidden” or unexpected. This episode replaces fear with facts and shows that a well-built budget can make homeownership not only possible, but powerful.
Quote:
“The taxes and insurance are not surprises—they’re scheduled and predictable. And if they go up? They go up in rent too. You’re just not paying attention.”
Highlights:
- Why most “hidden” costs are just poorly explained (and how to plan for them)
- How PITI (Principal, Interest, Taxes, Insurance) gives you a complete budget view
- Why rising property taxes and insurance aren’t deal breakers
- The renter’s blind spot: you’re already paying these increases—just for someone else’s benefit
- How to estimate and plan for HOAs, repairs, and future costs with confidence
- When fear is valid—and when it’s just misinformation
- The biggest budgeting mindset shift every buyer needs
—
Listen to the podcast here
Real Answers Pt 6: How To Handle Homeownership Costs Without Fear
Welcome back to part six on the twenty most frequently asked questions from first-time homebuyers with the answers you won’t find in Subreddits. Let’s go.
—
What is happening, my homies? I am David Sidoni and this is part six of the frequently asked questions with the answers that you’re probably not going to find in very many places on the internet. These answers are tested and successful. They are updated to the stressful affordability challenges of the 2025 and 2026 housing market. Let’s get right into it.
Demystifying “Hidden Costs” Of Homeownership
Question number fourteen, what are the hidden costs of home ownership that I should be budgeting for? When I scanned all the answers that the internet had on this question, it became quite clear to me that I apparently have a very different definition of the term hidden when we’re talking about hidden costs in home ownership. Most of these costs should never be considered hidden. I saw buyers frustrated about things that are so typically normal in any purchase.
Let’s just remove the word hidden from the question and replace it with, what is the research calculated and anticipated and not over inflated expenditures and costs that come with buying a home? What we want to do is we want to take away the fear and the ignorance of this process. Remember, here on the show, ignorance isn’t a dirty word. It just means you don’t know what you don’t know. We’re good with that. When I saw the list of “hidden costs,” the number one and number two things that they’re trying to warn you about are your property taxes and insurance as hidden costs.
The taxes and insurance are not surprises—they’re scheduled and predictable. And if they go up? They go up in rent too. You’re just not paying attention.
Can anyone say PITI? If you’re brand new to the show and you haven’t heard me talk before. Maybe you think PITI stands for the pity that others have on you when you have that giant new monthly payment. PITI stands for the full monthly payment that you’re going to look at when you do your calculations. It’s your principal, your interests, those are for the mortgage and then it’s your taxes and insurance. When you work the numbers with the rent replacement strategy formula, you’re going to be comparing your monthly rent payment to a full PITI payment with the T and the I. They are not hidden and it shouldn’t be a surprise.
Getting into the numbers on your taxes and insurance, here’s a truth bomb that counteracts what I see a lot of people say online. They say, “Don’t believe that realtor telling you that it’s fixed forever. That’s a sucker move because taxes and insurance go up.” You can’t compare that to rent because your home payment goes up, too. I’m going to say this again with love and from the viewpoint of the show, but that’s an ignorant statement. I don’t mean it as nasty. It’s just ignorant like ignorant like, “That sucks that no one is teaching me this. I’m going to start a show so people can know the truth.”
Ignorance is just unawareness. No judgment. The real hidden secret, if taxes and insurance go up in your area, then they also go up in the home of the apartment that you rent. Your landlord bakes in the new higher payments into a higher rent. If you’re a renter and you’re thinking that it’s a sucker to buy a place. You’re going to pay for the increase in taxes and insurance as well. It’s just going to be in the form of a higher rent. You got to pay for it either way.
With ownership and that PITI payment, you’re going to pay for the increase too with your T and I but you’re going to benefit greatly from the P in PITI, which is paying down your principal and you paying into a wealth builder. The big reason that the fear is so crazy overblown in these hidden taxes and insurance going up, the math is totally wrong. It’s not that big a deal. In your PITI, the T or taxes can range from 0.3% to 2% of your purchase price and that’s not the complete maximum. There are some crazy places but it doesn’t get much more than that. On the national average, it’s 0.9% that you pay when you purchase your home.
Let’s calculate that at 1% just to make it easy. You buy a home at $400,000, which means your assessed value for the first year is that purchase price, $400,000. You have to pay 1% property tax on $4,000. Those of you who are not great at math, that’s $4,000. We divide it by twelve and that’s $333 a month. That $333 a month is your base, but you’re already adding that into your PITI when you’re doing your calculations long before you get a home.
Understanding Property Tax Caps & Long-Term Savings
When people trip out on this and get the exaggerated information, the so-called hidden cost in your tax is going up and they overestimate these numbers in wild math. I don’t even know where they get it. Here’s how taxes going up works. In 46 states, your property taxes have limitations and caps on the amount that they can go up each year and it’s not much with the national average at 5.1%. Hang with me if you have another full math yet because this is where I think people get confused.
You’re like, “1% on $400,000 that cost me $333 a month.” Here’s what happened. You’re still paying the 1% on your assessed value. It’s just that you’re assessed value. Nationally, the average can only go up 5.1%. We take your $400,000 and we bring that value of which you get taxed to $420,400. That’s 5.1%. What that means is you’re going to be taxed annually on $420,400, which means your annual tax will only go up $204 a year, which works out to only $17 a month. That’s if your state fits in that average of 5.1% for the cap on tax increases.
In California, your property taxes cap at 2%. The increase on that same home in California is only $7 a month. That cap means that your tax liability and what you’re going to have to pay can only go up in very small increments. You’re always going to pay only that 0.9% on the full assessed value and that assessed value goes up very small every year but here’s what doesn’t. If you’re in California, and you’re in that $400,000 home for ten years. Let’s say, the value of the home is now $620,000, which is right on that 4.5% appreciation average.
You’re still only paying property taxes on that original $400,000 plus the 2% increase per year. That means your home’s worth $620,000 but you’re only paying taxes on $487,000. That’s your base tax value. Now, if that didn’t make sense to you, I get it but at least make sure that you don’t listen to someone who doesn’t explain the full picture if you don’t understand that math. If you do understand that math, then awesome. You’ll be able to tell that guy who’s screaming on TikTok, “Shut up, dude.”
The second one, the last I in your PITI, insurance. Yes, it’s a thing and you have to pay for it. If you’re working with a team way before you go out and start visiting open houses, then that’ll already be calculated into your rent replacement strategy. You’re going to know if the new payment with that T and the I included make sense to you so it won’t be hidden to you. Another thing I saw online that was a hidden cost that cracked me up was HOAs.
What? Hidden to who? If you talk to anyone that’s been researching buying a home for more than eighteen minutes. The topic of an HOA has come up. This is one of the most hotly contested topics and something that people know about. While we’re on the topic of the hidden cost of HOAs, let’s break it down. I have no idea if an HOAs right for you but I do know that I’ve seen numerous examples of people who came into the process assuring me or assuring their unicorn that they simply despise HOAs.
People who are like, “I don’t care what you say, David, or I don’t care what you say, unicorn. I’m never going to pay an HOA.” In fact, there were several people that I interviewed on the show that said the same thing. When they create their whole strategy, not only do they consider homes with an HOA in side-by-side comparisons. Some of them even bought them. Sometimes, that’s due to the hidden savings in HOA fees. I know it appeared as a hidden cost in all the places online but there is a hidden savings that a lot of people don’t talk about.
For many condos and townhomes, your HOA covers the bulk of your main insurance cost. Now, if you bought a regular home, you have to pay that insurance out of pocket. That’s why we call it PITI insurance. If you pay $350 for an HOA, according to Insurance.com, the average insurance on a $400,000 property is $269 a month. It’s different everywhere but I checked it. That’s pretty close. You’ll still need what’s called a wall in insurance policy. Those run about $350 to $355, was one average I saw. That means you’re paying that HOA of $350 but you would have had to pay $269 for an insurance policy on a home. Now we take the $55 out of that $269, that’s $214.
Smart Strategies For Anticipating & Managing Home Expenses
That means your $350 HOA fee, $214 of that is going towards the I or the insurance that you would have to pay on a single-family home, anyway. When you’re looking and comparing a single-family home with no HOA and you’re looking at a homegoing cost $350 more. Not really. It’s $350 minus $214. That little difference there, maybe the amenities right there are enough that you can now compare those homes apples to apples instead of one of them costs $350 more. One of the other things in the hidden costs of buying a home was utilities.
One of the hidden costs of buying a home is utilities.
Once again, did you think people are buying a home thinking that electricity is free in their house? It works the other way. Your utilities sometimes are free with certain apartments, but when you’re moving forward, if you do want to figure out what’s so hidden about utilities, here’s some tips for you. First, you can research things with utility companies before you go home shopping. Once you’ve got certain individual homes, you can get a good guess it’s on the costs. Here’s something that I always encourage everyone to do.
Once you negotiate your contract and you’re under contract, you got the home. Now you’re in the inspection due diligence period. The second negotiations, they’re going to happen. During that time, ask the seller to share the last couple of years of utility bills, especially ask them for the hottest months and the coldest months. Double especially to see some bills for the last few years if the home has solar panels.
Next on the list of hidden costs was maintenance and repairs. As a dude who hears all the arguments for renting against buying a home. Not having to pay for your repairs and having your landlord pay for all that stuff. That’s one of the arguments that I hear the most. We’ll walk into this again attempting to shift your mindset a little bit because using the full math from part four of this series, that will show you that in the long run, you’re going to be doing a lot better creating more stability and more safety for yourself when you own a home.
It will help you to see, probably the biggest formula I do when I’m talking about, “My landlord pays for everything.” You’re right. I’m sorry I did the dumb guy voice. I don’t mean to disparage you. Let’s just look at this in a different way. If your toilet breaks, it sucks. You have to pay $500 to repair your toilet. What if that happens in year two or year three? Now, you’ve done two or three years of saving your rent $2,000 or $3,000 or $4,000 a month and been putting it into your own home ownership. $24,000 or $36,000 or $48,000 that you have put towards yourself or, “I saved $500 because I didn’t have to repair a toilet.”
A quick side note before I get very harsh and myth busting like a mother on the misconceptions about this particular hidden cost. Here’s a tip when it comes to, “I’m super freaked out about repairs.” Most of the time, you don’t have to pay for the first-year repairs. For about $709, you’re going to get most major issues covered with a new home warranty. They’re robust because they’re trying to get you to buy them at a much more expensive price later on down the line. They give you an introductory price when you’re trying to buy the home.
You can get items prepared that would cost thousands of dollars for just a deductible payment, which is usually like $100 or less. Be sure to work with your realtor to have that home warranty as part of your contract. A lot of times, depending on the market or on the state, the seller will pay for it. I think the easiest way to break down this myth is to look at an actual report where someone was trying to say, “Let’s get real about this. It’s not as cheap as you think to own a home.” There are tons of misinformation on Reddit and all the other forums, but this is the best way to illustrate it.
This headline epitomizes the ignorance and hyperbole and all the fear-mongering that happens with the clickbait headlines. Check this. This is what it said, “The real cost of owning a home and we’re going to get real. The average annual cost of maintenance, repairs, taxes, and insurance is now over $18,000 a year in the US. That’s $1,500 a month on top of your mortgage. That includes things like replacing a broken water heater $800 to $ 1,500. Fixing a roof leak, $300 for a minor patch or $10,000 if it’s bad. HVAC servicing, pest control, tree trimming and much more.”
This article bussed me off. Nobody should be budgeting and comparing without looking at their taxes and insurance. Saying that this is on top of your mortgage, that’s crazy. What happens is they get it all confused because they throw that $1,500 a month on top of your mortgage and make you think that the maintenance and the repairs are costing you $18,000 a year. I have no idea where they got that math but I can tell you this. On the average $400,000 home, we figured out the taxes would be $333 a month and your insurance would be $269 a month.
No one should budget or compare costs without considering their taxes and insurance.
Right there, when you’re using the full PITI calculations, which most people do. That changes the whole number. Now you can take $600 off that $1,500 a month. Let’s be real here. That’s going to leave you $900 a month that they’re saying that you should have extra for repairs and maintenance. How do you not get yourself in that situation? First of all, you hire the best support team to help you with your purchase who will thoroughly go over your inspections before you officially commit to buying that home. Between choosing the right team and then working through the entire inspection with them and doing all your due diligence.
Not to mention the fact that you are going to have a home warranty that’s going to cover the first year. Between both of those things, you shouldn’t need $900 a month for unexpected repairs in the first year. Hopefully, with all the due diligence on those inspections. Not for the first few years based on that quality information that you get and have gone over with a professional team that does this all the time. As for the “in the article” HVAC, servicing, pest control, tree trimming and more, that’s another reason why you collaborate with the experienced professionals because what you’re going to do is you’re going to create a spreadsheet for every single home that you’re even considering.
That way, these minor things can be expected costs, not surprises and you get that when you’re working with an experienced advocate. Now, I’m not saying that repairs and maintenance won’t factor into the life that you own the home. They do, but the key is they factor in as anticipated. Not as some hidden thing that is going to happen down the road and surprise you. The way you do that is, you’re covered for your first year and you’re okay. Your home inspection checklist is going to be something that’s going to help you so you feel like you’re covered for years 2 and 3 and 4.
I’m not saying you shouldn’t save. You should, but notice I said, your home inspection checklist. You’re going to take your home inspection and you do not get repaired or you don’t get a credit from the seller. You keep that and that just becomes a checklist for you to look at those items and figure out what you want to do. You can even go through it with your inspector and your realtor and figure out which ones are the most important ones to do next.
Your first year, you can start setting up an automated savings account for those items and prepare for them. No, it’s not a perfect solution. It’s not a perfect formula. First of all, when you take away the ridiculous math that they did. You’re going to find that most of the time when you’re looking at everything at the inspection and you’re paying attention to it and you’re not ignoring it. You’re going to be able to tackle those things because you have at least mentally, hopefully, and physically prepared for some of them.
Here’s another great tip. Annual, HVAC, sewer, septic and chimney tune-ups $75 or $100 once a year can save you thousands in the long run. I can’t recommend this enough. All these hidden costs, most of them are going to be hidden at all because the right team is going to help you uncover what needs to get fixed and what you need to start preparing for in the future. It’s a home. It’s going to have things that you need to get fixed. Educated homies work their last leash ever program by automating that savings.
I have homies that set up the automated savings to a down payment and closing cost account. They also created another automated savings account for furniture, appliances, decorations, plants, and repairs and maintenance. That’s just there for them to start automating money going into it for when they own the home. I had one homie who called it fixing stuff and cool stuff for my house. That’s what he called it. Don’t think that these hidden costs are these evil things lurking in the dark, hiding in the shadows that you can’t see. All you have to do is come with this knowledge and you can walk into home ownership with a giant flashlight and see them all coming.
Question number fifteen, what common mistakes should first-time home buyers avoid? Now, this is a question I love because it tells me that you’re trying to learn from other people instead of learning the hard way. Let me tell you. There’s a very long line of people that we wish that they had done the same type of learning, but they didn’t and their stories are ugly. When people ask me this question, I know one thing about them. That person asking is someone who wants to be prepared.
The majority of people research online and they’re asking about what mistakes happen when you’re choosing a home or they ask what mistakes happen during the home inspection, the money pit stuff or they say, “What mistakes do people do when they’re getting the interest rate for their home loan? I don’t want to get ripped off.” According to all the questions that people ask, these are seen as the big mistakes and these have the worst horror stories.
Avoiding Common Homebuying Mistakes: Prioritize Your Team
My biggest tip about my twenty years and the biggest mistakes that I’ve seen people make is to shift away from those questions. Shift away from trying to find what those mistakes are. Since day one of this show, I’ve stated the best advice to avoid those mistakes are and could and might be part of your dealings in trying to buy a home. Avoiding those mistakes comes into play long before those questions ever come up. To avoid the most common mistakes, spend ten times more time on your research for how to choose the best top-notch quality realtor and lender.
To avoid the most common mistakes, spend ten times more time researching how to choose a top-quality realtor and lender.
Lean on them and their experience to help you point out the mistakes that are possible for whatever you’re doing. To help you avoid all of these things you’re concerned about as well as mistakes that you didn’t even know to ask. I can tell you from the years and years of research on this. The average first-time home buyer researches all those mistakes and what home to buy, what to look for inspections, and how to get the best loan rate for hours and days and sometimes even months more than the time that they put into researching how to hire their team.
If you’re having knee surgery, would you spend all of your time learning about every little detail of the surgery process, every little thing that could happen, would happen and how to move the scalpel, and what to do? No. Would you spend your time researching for the best doctor to do the surgery on you? As a matter of fact, in episode 186, I interviewed a doctor who was a reader. He had a very startling revelation during his home buying process. He’d been researching all these mistakes and things he was looking for years. Learning how to avoid all the pitfalls and then he finally felt like he was ready to hire his realtor.
Now, he worked with that realtor. He realized that every time his realtor we’re giving him a recommendation, he would triple check on everything that she said, like, “It sounds alright but let me see what the internet says about that.” Suddenly, he said he was walking in his apartment and went, “I’ve done it. I have turned into all of my patients that come to me and they WebMD me to death.” The biggest tip I can give anyone if they want to avoid all those mistakes that they’re so freaked out about is to spend months and months building trust with a realtor and a lending team creating your plan together.
It’s their expertise that’s going to guide you away from mistakes and help you avoid the pitfalls, including a whole bunch that you never even dreamed of, and nor did the people on Reddit, who, FYI in their lifetime have bought one home. The first-time home buyer Subreddit is people who bought one home. A professional realtor and a professional lender do this every single day and see it hundreds of times. If those people, you vetted them well and they’re truly looking out for your best interests. The mistakes are not part of the process. You’re not a number to them. You’re a client for life, so you should be able to rest easy knowing that they need you to go through as a mistake free process as they can do.
Their business only grows when you have a great experience and then you give glorying reviews and tell all your friends, “You got to work with this realtor or this lender. They’re a unicorn.” Understand, I offer this advice to you not as a theory but from two decades of real stories and real clients. Sometimes unfortunately, people reach out to me with real tears. The second part of this big mistake is trying to do too much on your own and waiting to hire the right team.
Let me once and for all, probably it’s the 18th time I’ve done it on the show. Once and for all, I want to let you know that you cannot call too early to a professional team that serves first-time home buyers at the highest level. They’re ready for it. They want it. They embrace it. You are not bothering anyone. No one is bummed out if you reach out early if they’re good at the job and they understand how the process works. Get to them early. It reduces the stress for everyone. For your own protection, don’t try to do this on your own. You don’t have to and don’t try to Google your way to home ownership because there’s no one-size-fits-all plan.
Your best path is unique to you, your financial picture, and your local real estate market and always your personal goals. Yet I still see folks binge YouTube videos or scroll through the Subreddits and they think that they’re building the most bulletproof custom plan because they’ve got all the mistakes that everybody else made. Now, they’re going to build it all on their own. Spoiler alert. You’re not going to avoid stuff. Not that way. A little side note, the best thing about working with someone early is not all the mistakes that you avoid. It’s all the options that you discover that you didn’t even know were possible.
Don’t try to Google your way to homeownership—there’s no one-size-fits-all plan. Your best path is unique to your financial situation, local real estate market, and personal goals.
A giant detail that I see all the time that is a big mistake that I see happen far bigger than the home inspection and all that stuff. The first-time home buyers don’t connect with the unicorn until they’re right ready to go out and go shopping. That’s not just me talking. You ask anybody in the real estate or lending industry and they will tell you that if they had teamed up with any one of their buyers a few months earlier. They could have set them up for a much better deal because with time, there’s some simple calculated steps that can make the whole process easier.
I’ve said it again on the show lots of times. I’ve had so many buyers that tell me right as I’m handing them the keys, “Sidoni, if I had started this sooner, I could have done this way earlier and saved thousands of dollars on rent.” Every time I say it, it breaks my heart a little bit. They were ready and they didn’t know it. The idea is to get this information out as soon as possible and know that your biggest mistake is not checking with someone to see what I can do. It’s the number one mistake I see. people doing too much on their own waiting too long to talk to a team and then not hiring the right realtor or lender to help you avoid all those mistakes that you’re freaked out about. That’s it, period, the end, curtain.
Let me give you some tips on how to vet higher interviews with your real estate support team. First of all, higher based on quality, experience and their willingness to guide and educate first-time home buyers on the entire process. Are they truly running a business that caters to the planning execution of the entire first-time home buyer process? Very important. I know it could sound harsh, but I’m doing this for a long time. I have thick skin now. I don’t care. Only because your friend likes their realtor, doesn’t mean that realtors are the right person for you.
Remember, that’s coming from me, who my whole thing is, when I work with people, I tell them and tell your friends. I think they should tell their friends that I’m good at what I do but when it comes to me advising you, unfortunately, because I know the numbers that 9 out of 10 real estate agents are not doing a good job for first-time home buyers. When I get referred to someone, I’m the 1 out of 10. When you get a referral from your friend about their realtor, there’s a 9 out of 10 chance that guy or gal is not right for you.
Your greatest nugget of knowledge to protect you is your knowledge of the game and then the knowledge of the players that are involved in the game. Seventy-one percent of realtors didn’t sell one home in 2024 and as far as the history of realtors, 87% quit before they hit their fifth year in the business. The entire real estate industry has been prioritizing you at the very bottom, ignoring you as a consumer for 50 years. They’ve created a system that serves you up. Only 13% of them were going to be here in a few years. They give you untrained and unqualified “licensed agents” because anyone could pass that test.
The reason they serve those people up to you is because that is how the brokers can make their maximum profits. All of that stats, understanding the players in the games and who’s doing what, why and how they’re trying to make money. That’ll make you dig deep when you’re attempting to vet. The best way to avoid mistakes is to hire someone who specifically says, “This is our first-time home buyer program and we are obsessed with education, planning and strategy for first-time home buyers.” Not someone who’s just trying to close a deal.
The reason you want to make sure that you’ve got the right advocate working for you is because lots of stuff can happen. There are buyer mistakes like letting the emotions control the deal, skipping the inspection or blindly waiving contingencies or people who get so obsessed with trying to time the market or maybe not working on your credit scores early enough. When you’ve got the right person who is dedicated to the planning and the education for you. All the major mistakes mostly are going to be avoided using that savvy and compassionate professional because their means of objective is your financial success, your financial future.
It’s not about them securing theirs by getting the commission from you. I cannot say it more strongly than this. I’ve been in this business for many years and I dedicated the last seven of them to build an educational platform to get first-time home buyers the insights on how to succeed. The number one and the biggest mistake that I see time and time again is first-time home buyers focusing too much on the mistakes of the nuts and bolts and details on the process.
Not hiring the right team soon enough to help them prepare for those mistakes and to help them guide them through those mistakes when they get to those things that happen in any negotiation. I see people putting way too much emphasis on their ability to research and learn everything and not putting the emphasis and truly the value in the research that they do inventing the team that’s going to be with them step by step through the whole process.
Demystifying Mortgage Qualification & Affordability
We’re getting to questions sixteen now. What are some financial requirements that I need to qualify for a mortgage? A big question for the first-time home buyers. It makes total sense. You want to know where you stand before you dive in. The problem is, there’s not a magic formula. There are no perfect little magic numbers for everyone. The formula for a loan approval is more complex than just, “If you make $100,000, you can buy this much home.” The common mistake that people make is assuming that there’s a one-size-fits-all answer like that question I just asked.
If you’re looking for a ballpark answer online, I tell you the answers you get there are way bigger than a ballpark. Think like a city block. No, thinking of the entire county. Maybe even a whole state. Forget it. Lame analogy but everyone says, you’re in the ballpark. The point is, you might think that these answers are in the ballpark but they seriously could be way off. What I did was I went and I checked some of the responses online. On Google, the AI is at the top of the page. When I asked, “If I make $100,000, how much house can I afford?” It gave me a very clear $300,000 to $400,000.
The next one after the AI, top one, first response on Google. It says, “You can buy a home between $294,633 and $425,642. First of all, let’s talk about how ridiculous it is that there’s no information. They know nothing about you, the buyer but they’re giving you these insane specific numbers $294,633 and then $425,642. That’s ridiculous, but then let’s talk about the spread. It’s $125,000 or $131,000 in the spread. How is that helping anybody? “I can buy a home here or one for $131,000 more.”
That’s specific answer was brought to you by the fine people at Rocket Mortgage. Continuing down Google as you scroll down, now you found Zillow’s affordability calculator and what it does is, it takes your income, your monthly debt and your down payment. It calculated that for a $100,000 salary, $250 of monthly debt payments and a $20,000 down payment. You can afford a $338,425 home. Once again, the specific numbers. Let’s just say $340,000. This one looks a little more legit. Right underneath it, it says, “Click here for the disclaimer.” I’m not kidding. You open that and it says, “Zillow’s affordability calculators tend to be used for educational purposes only and are subject to a number of factors.”
Bottom line, they sure as heck don’t guarantee it. When you’re trying to figure out how much home you could buy, not a lot of help online. Where do we go next? Don’t try to figure this one out on your own. There are dozens of variables that change the answer for each individual person. As much as I wish I could give you something that says, “With just some simple normal factors like your salary, your debt, your savings and your credit score. You can buy this much home.” I wish it worked like that but there’s still a lot of other stuff that goes into it.
The types of loan programs that you can get could change everything and then also so many things about where you’re looking to buy. What are the potential programs for their first-time home buyer down payment assistance? There’s so much stuff. It’s not that I can’t give you a guesstimate like the Zillow affordability calculator did. It’s that, I just won’t. I’ve seen too many people get this question answered and answered incorrectly because they only use these little bits of information. They either get an overestimated answer and then they get way out of themselves and they get utterly crushed when they find their dream home.
Only to find out that when they get deep into it, they have no ability to afford it. They can’t purchase it or worse than that. It bums me out when I see people get an underestimated answer and then they give up. I’ve seen it a lot. They stop their research altogether. Now, that’s because they come back to me two years later and that’s when I hear the story. They were thinking that they’re the only option because of this answer that they got from some weird thing they read online or some way too few variables calculation system. They go, “That’s all I can afford? Forget it. We’re just going to keep saving and pray that we get a raise and make more money.”
Meanwhile that entire time, they’re paying rent to nothing and they’re probably watching home prices go up. It’s all because they just didn’t get the correct information at the start. We got to figure out your best personal answer. Don’t seek to figure it out all on your own and then go hire the team based on what you figured out that you think you can afford. Hire the team to help you discover what you can afford now using their knowledge, using all the custom dozens and dozens of variables. You might be surprised at what you can afford.
Don’t try to figure it all out on your own and then hire a team based on what you think you can afford. Instead, hire the team first to help you discover what you can actually afford—using their expertise and the dozens of custom variables that go into the equation.
It’s not that complicated for them and you’re not bothering them to find out. That’s why unicorn lenders don’t say, “It’s an approval appointment or an approval call.” No, instead they call it a discovery call. The best thing about this is that if you get the bummer answer, if you do the full financial picture and you still get a number lower than the one you were hoping for. No worries. A quality lender and a realtor team are going to get you action steps for you to take. Even small ones on your budget, your credit score, your debt and your savings so you can build your own personal roadmap to get you that approval that you’re looking for. It’s not an approval call. It’s not a red light or a green light. It’s a discovery. Don’t look at it as a red light or green light. It’s a starting line.
What you’ll be doing is running the race to get the approval you want with a great coach on the sidelines. I know a lot of you are like, “I came here for answers and you’re just telling me I can’t get the answers.” If you want to hear some other numbers and calculations for guesstimates, you can check out the other, how much can I afford episode. Again, after many years and tens of thousands of first-time home buyers I educated, I have learned that you can listen to all those shows. There’ll be quite a few of them there but in less time, you could have two 45-minute phone calls. One with a vetted lender and one with the vetted realtor, and you can get the full picture.
It’s like 90-minutes of research. A lot of people will do that after one adult beverage and then grabbing their laptop in bed. I see you on the YouTubes. You watch one and then you watch another and then you’re like, “Too much YouTube. What about Instagram?” I see you. There is an option. You can get real answers from real people. Hit me up at HowToBuyAHome.com if you have specific questions for your specific buying path. Part seven is up next. More on the twenty questions. Will I finish it in the next episode? Who knows. Stay tuned. Stay curious and don’t give up. You can do this.
Important Links
- Insurance
- David Sidoni on Instagram
- David Sidoni on TikTok
- How To Buy A Home
- How to Buy a Home on YouTube
- How to Buy a Home on Apple Podcasts
- How to Buy a Home on Spotify