The widespread popularity of home buying has always been an important way to build economic security. Making homeownership a reality is still the best and only way to stop renting and build equity. Here is a rundown of the costs involved in buying a house that you might want to know if you’re buying a house for the first time:
Breaking Down the Cost of Purchasing a Home
As you consider the total price of a home, it’s necessary to calculate the three major expenses you’ll cover so you can finally call it your own.
Downpayment
Down payments are required when you buy a house. Suppose a down payment is 20% of the home’s total price. If a buyer has a typical down payment of $30,000, that mass of cash is supposed to come from savings, gifts, loans, and selling other assets.
For example, if a buyer has enough savings to make a down payment, they could sell an investment or use their 401(k). Perhaps a relative is helping out with a gift or loan. Whatever the case may be, a down payment anywhere between 3 and 20% is needed for purchasing your home.
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Today's Mortgage RatesClosing Costs
The closing costs associated with buying a home are also known as settlement costs. These fees are for various purposes and can include a loan origination fee, attorney or closing attorney fees, recording fee, transfer taxes, title insurance, and lender’s insurance.
Lenders usually include the closing costs in the mortgage, but some buyers may be required to pay them separately.
Mortgage Payment
Mortgage payments refer to the money you pay to your lender each month to cover the interest on the loan and the principal of the loan.
Most conventional mortgages have a fixed interest rate, which means the amount you pay every month remains the same regardless of the fluctuations in the market.
The mortgage payment amount that is applied to the principal is negotiated in the loan process. For instance, a borrower looking for a 30-year mortgage may deal with a lender to keep the initial monthly payment low. However, that low monthly payment will mean the borrower will be paying for longer, thus making the total interest higher in the long run.
Let MidAmerica Bancorp Assist You in the Mortgage Process!
It’s true that buying a home is a big endeavor. However, the truth is that buying a home is still worth it. The key to achieving homeownership is knowing all the steps and getting all your finances in order. Also, don’t forget to enjoy the experience of being a first-time home buyer as the process of finding your dream home can be exciting!
MidAmerica Bancorp, Inc. can provide you with the home loan in Oak Lawn that suits you best. We are also licensed to serve in Illinois, Indiana, Florida, Michigan and Wisconsin. Call us today at (708) 237-4050 to know more about your loan options!
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