What are Some of the Costs That a Buyer Will Have When Purchasing a House

What are Some of the Costs That a Buyer Will Have When Purchasing a House

Getting a mortgage involves several costs, including:

1. Down payment: This is the sum of money you must put down as a down payment when buying a house. Depending on the type of mortgage and the regulations of your lender, the down payment amount varies. In general, your monthly mortgage payments will be lower the higher your down payment.

2. Closing costs: Closing costs are the fees incurred when a mortgage is finalized and a home is purchased. Appraisal fees, title search fees, Pre paids like taxes & home owners insurance, legal costs, and other expenses may be included in the closing costs. Typically, closing fees make up 3% of the home's purchase price.

3. Mortgage interest: Mortgage interest is the cost of taking out a loan to buy a home. Your credit score, how much money you put down as a down payment, and other factors will all affect the interest rate on your mortgage.Private mortgage insurance (PMI): If your down payment is less than 20% of the home's purchase price, you may be required to pay PMI. This is an insurance policy that protects the lender in case you default on the loan. See below for more information on PMI

4. Homeowners insurance: In order to safeguard your house from theft, natural catastrophes, and other risks, you'll also need to buy homeowners insurance. 

5. Property taxes: You are liable for paying the property taxes on your home as a homeowner. Your home's worth and the local tax rates will determine how much you pay in property taxes.

Keep in mind that the costs of getting a mortgage can vary depending on your location, lender, and other factors. It's important to work with a mortgage professional who can provide you with an estimate of the costs involved in your specific situation.

Why PMI may be required for your loan

When the borrower's down payment on a home is less than 20% of the purchase price, the lender may require the borrower to acquire PMI, also known as private mortgage insurance.

To protect themselves in the event that the borrower defaults on the loan, lenders need PMI. In most cases, PMI is added to the monthly mortgage payment, which raises the total cost of the loan.

If your down payment is less than 20% of the home's purchase price, the lender may require you to pay PMI on your loan since they view you as a riskier borrower. The lender is taking precautions to protect itself in the event that you default on the loan by demanding PMI.

It's crucial to understand that PMI differs from homeowner's insurance. While PMI safeguards the lender in case of default, homeowner's insurance covers the borrower in case of loss or damage to the property.

Are you thinking that now or in the near future maybe be time to by a home? You can Contact Melissa directly or you can Download my Ultimate Buyers Guide.

If you are thinking of BUYING in today's market I would love to help you. I have great people on my TEAM that can help you learn more about mortgages and how much you can qualify for and afford. 

Click the link above to fill out an application on their secure site to see what you qualify for or simple call Jane or Zach Johanns with New American Funding.

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