The Home You Can Afford
When you start looking for your new home, you’ll save yourself a lot of time and frustration if you are sure to start in the right direction. Putting a pencil to paper and calculating the mortgage expenses you would feel comfortable paying each month will set you in a specified price range. With your search narrowed down, you’ll know better which houses to consider before you decide on 'the one.'
You’ll also want to consider additional costs that might be involved above and beyond your monthly mortgage payment. In some instances, you’ll encounter upfront and ongoing expenses.
Upfront Expenses
Home Inspection costs: These may fall between $200 to $900. The costs depend on the running rates in your area.
Down Payment: The down payment for homes usually ranges from 3% to 30% of the purchase price. You will acquire more equity in your home with a larger down payment. This also will set you up with lower monthly payments. If your down payment is less than 20%, you will be required to have mortgage insurance.
Closing Costs: These are expenses that fall above the price of the property which are incurred by buyers and sellers in the process of transferring ownership of a property. Closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The cost of closing typically is about 3 percent to 6 percent of the mortgage amount. Closing costs will vary according to the area of the country; your PrimeLending Loan Officer is able to provide estimates of closing costs for you.
Ongoing Expenses
In addition to your monthly mortgage payment, homeownership also brings with it the following potential expenses:
- Homeowners Insurance (required)
- Mortgage Insurance (if applicable)
- Flood Insurance (if applicable)
- Utilities
- Property Taxes
- Home Repairs/Improvements/Maintenance
After you’ve taken these factors into consideration and have established a possible budget, the next best step you can take is to obtain a preapproval letter from your PrimeLending Loan Officer. Armed with this, your search will have the strength that comes from financial backing, and you will have the freedom to enjoy looking for your new home.