What Are Closing Costs?
If you are thinking of buying a home, make sure you do so prepared. Buying a house is one of the biggest investments you may ever make. There is so much more to consider than how much you will need as a down payment to what the current interest rate is.
Many individuals who have never owned a home will misjudge the true cost of maintaining a home by only considering what the mortgage payment would be in correlation to rent that they are paying.
The carrying cost of your new home is not just as simple as your mortgage payment. Depending on the size of the home your carrying costs could be upward of an additional $1,000 per/month once you factor in heat, electricity, property taxes, maintenance expenses and more. PLUS, once you move in you may discover that there are repairs needed to the property. This can even occur if you purchase a brand new home.
Here is the 4 step program that a new homebuyer can follow to prove to themselves that they are in fact ready to purchase a home.
1. Use an online mortgage calculator to determine what the cost of your new mortgage payment would be. If the current interest rate is 4% then calculate your mortgage at 6% always planning for the worst case scenario. Then add $1,000 per/month to this payment. If your calculation is based on a $200,000 mortgage, the mortgage payment would be approx $1,200 per/month and with the additional $1,000, the total would be $2,200 per/month.
2. Using this example, save $2,200 per/month for the next 12 months (in addition to what you are paying in rent currently). By the end of 12 months you will have saved $26,400.00 which would be equal to a 10% down payment on a $200,000 property with sufficient funds to cover closing costs.
3. Do not shop around for a mortgage. Start off by obtaining your Equifax Credit report and your True Assess Financial Report Card. These two reports will give you all the information you will need to build your financial profile and credit report so that when the time does come you will qualify for a low rate mortgage.
4. Research online and start a relationship with one or two property appraisers, property inspectors, mortgage brokers, insurance brokers and more. I say research one or two because the more resources you have the more prepared you will be once you find the home of your dreams.
Many individuals who have never owned a home will misjudge the true cost of maintaining a home by only considering what the mortgage payment would be in correlation to rent that they are paying.
The carrying cost of your new home is not just as simple as your mortgage payment. Depending on the size of the home your carrying costs could be upward of an additional $1,000 per/month once you factor in heat, electricity, property taxes, maintenance expenses and more. PLUS, once you move in you may discover that there are repairs needed to the property. This can even occur if you purchase a brand new home.
Here is the 4 step program that a new homebuyer can follow to prove to themselves that they are in fact ready to purchase a home.
1. Use an online mortgage calculator to determine what the cost of your new mortgage payment would be. If the current interest rate is 4% then calculate your mortgage at 6% always planning for the worst case scenario. Then add $1,000 per/month to this payment. If your calculation is based on a $200,000 mortgage, the mortgage payment would be approx $1,200 per/month and with the additional $1,000, the total would be $2,200 per/month.
2. Using this example, save $2,200 per/month for the next 12 months (in addition to what you are paying in rent currently). By the end of 12 months you will have saved $26,400.00 which would be equal to a 10% down payment on a $200,000 property with sufficient funds to cover closing costs.
3. Do not shop around for a mortgage. Start off by obtaining your Equifax Credit report and your True Assess Financial Report Card. These two reports will give you all the information you will need to build your financial profile and credit report so that when the time does come you will qualify for a low rate mortgage.
4. Research online and start a relationship with one or two property appraisers, property inspectors, mortgage brokers, insurance brokers and more. I say research one or two because the more resources you have the more prepared you will be once you find the home of your dreams.
Source...