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You may not need the full loan amount offered.
While you can get a loan for a large amount of money, you may not want to get that full amount. Think about all your other expenses first and the salary you make. Be sure to break it all down and make sure the monthly payment isn’t going to be too much when everything else is added on. We have a Mortgage Qualifier calculator that can potentially help you in determining your budget.
Think about the upfront costs.
Closing costs can be around three to four percent of your loan or more and it’s nice to try to have a down payment anywhere from ten to twenty percent. If you want to avoid paying additional private mortgage insurance (PMI), you’re looking at a twenty percent down payment. Here are some of the items included in closing costs:
- Application fee
- Appraisal fee
- Title search
- Title insurance
- Attorney fees
- Home inspection
- Potential transfer taxes
These are large upfront costs so it’s important to factor them in and begin saving for them. If you work on saving at least twenty five percent of the sale of the home, then you’d be in a good place to cover the down payment, closing costs, moving fees and so forth. You can try to negotiate that the seller pays for your closing costs which could help save you some money – your realtor can help you know if this is a good option or not depending on the circumstances of the area and home.
Make note of utility, insurance, and tax increases.
If you are moving to a new area, even if it’s across town, utilities, taxes, and home insurance prices could all be different than what you currently pay. Be sure you’ve calculated this into your monthly payments as well because it could be a couple hundred dollars more than what you are paying now depending on the new home you are looking at and the area it’s in.
Ask your bank questions so you fully understand what the costs will be.
There are many mortgage calculators on our website that you can use at any time to check out some numbers beforehand. If you have any additional questions, or just don’t fully understand what you’d potentially have to pay upfront vs monthly and when those payments would start, ask your bank. Our Mortgage Loan Officers are always happy to help! We are here for a reason – to help you and create a smooth home buying journey. Our mortgage options suit any need so contact us today with your questions and concerns so we can help put your mind at ease!