The first thing you need to do is to figure out how much you can afford to
spend each month. The first step is to break down the cost of purchasing
a home and home ownership that you need to budget for.
Cost for purchasing a home will be the
earnest money, down payment, appraisal fee, inspection fee, and closing costs.
Earnest money is the money deposited to an escrow account when an offer
is accepted by the seller. Down payment is what is required by the lender
for the type of loan you applied for. Closing costs include loan
origination fees, discount points, title searches, title insurance, taxes, HOA
transfer fees, credit report charges and different inspections and more.
Typical closing costs are 2 - 5% of the purchase price of a home
Home ownership costs includes mortgage
insurance, monthly HOA fees, taxes, homeowners insurance, and maintenance,
repairs and general upkeep. Some loans require mortgage insurance such as FHA loan
and conventional loans with a down payment of less than 20%. The FHA will
have an MMI (monthly mortgage insurance) for the life of the loan unless you
refinance. General upkeep includes the utilities such as gas, water,
electric, telephone, internet and cable TV.
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