Buying a house and securing a mortgage is a complex transaction involving several moving parts – that’s why it helps to have a team of great people on your side, including your independent mortgage lender and real estate agent. Navigating your road home is more than just deciding what amount you are able to spend on your new house, there are costs and fees to understand that sometimes fall through the cracks. Here’s a closer look at what you can expect when moving towards the closing table.
Principal and Interest
Your mortgage is made up of principal and interest. The principal encompasses the total amount you owe for buying the home. The interest is the percentage that you’re charged for the taking out the loan. If you choose a fixed rate mortgage, your monthly payment will remain the same (though you can always pay more if possible). When you choose an adjustable rate mortgage, that rate may change over the life of your loan.
When you own a home, you are also responsible for your local property taxes. These taxes are assessed by your municipality regularly and change based on the fluctuating value of homes in the area. Your taxes go to fund schools, safety, public spaces, street maintenance, sanitation services, and more.
Homeowner’s insurance policies protect you from having to pay for losses and damages to your property is something unexpected happens, like a burglary or a fire. These policies can cover more than just the structure of your home, such as your belongings and some injuries that occur on your property – it all depends on what you choose to include in your policy.
Private Mortgage Insurance
You may also need to take out PMI. This is a type of insurance that covers the protection of the lender in the event you stop making payments on your loan. In most cases, with a conventional loan, PMI is included in your mortgage payment. You may be responsible for obtaining a policy on your own for other types of loans.
Third-party fees include anything you have to pay in the homebuying process that isn’t related to your mortgage. These fees can include:
To learn more about these fees and other possible inclusions, check out this article.
Are you ready to buy your next home, or have questions about associated costs and fees? Give me a call at 828-348-1907, I’d be happy to talk you through it.