mortgage from Personal Money ServiceThe decision of purchasing a new house raises a lot of considerations, calculations and questions. Generally, most people have to take out a mortgage to afford such expensive buy. That is why financial aspect of this issue is quite difficult. You need not only to decide how much money to borrow, but also to take all the surrounding costs and expenses into consideration. For the beginning you should understand all the important definitions about mortgage. They will help you to determine what mortgage size you need.

Bonus article: Use these 5 tips to buy home!

Important Factors

Before choosing a mortgage you should revise your financial situation. Your income and payment accounts matter a lot. Still, your future employment and your residence history are taken into account as well. The other important factor to think about is a down payment you can make. This is a sum of money you can invest at once.

You should be careful with the money available to borrow. Sometimes this amount of means can be higher than the actual sum you can return. The point is that high monthly payments can be overwhelming to your budget. Thus, you need to borrow only the necessary quantity, but not all the money available.

Expenses to Plan

Purchasing a house requires on your part not only to cover a mortgage, but other expenses as well. They include:

  • Loan application fees. These are service fees that are often calculated as 1 or 2% of the total house price. But these fees can also be flat. Sometimes underwriting, appraisal and loan reporting fees are also included in this item. While some lenders determine them as closing costs.
  • Down payment. This payment makes your mortgage rate better. The higher payment you can invest in a home right now, the less money you will need to return regularly. The amount of this first payment can be up to 20% of the entire house price.
  • Earnest money. This money is paid to an owner of the property to prove you are a real candidate and want to make a deal. This cost is used to secure that your proposition is accepted.
  • Closing costs. They are generally calculated as 2% to 4% of the total mortgage amount. Sometimes these costs can be included in the mortgage amount. So, you can cover them making regular mortgage payments.

These closing costs include a list of the other fees. But don’t worry about the covering, as they are paid at once. They include:

  • Attorney’s fees
  • Mortgage points
  • Surveys and inspections
  • Title inspections and search
  • City recording costs
  • Escrow deposit

Home Maintenance Costs

mortgage loansOwning a house requires other financial expenditures in addition to the regular mortgage payments. So, you should consider the following monthly payments:

  • Mortgage insurances. Most lenders providing mortgage loans demand that you pay this insurance, in case your first payment is less than 20%
  • Home insurance (find out more about home insurance policies from Personal Money Service)
  • Property taxes
  • Repairs
  • Utilities

Now you understand that you should consider much more expenses than just mortgage payments. So, don’t just follow the desire to possess the greatest house in the neighborhood. Think about home maintenance and your financial possibilities in future. Take into consideration the fact that the payment period is quite long, so your solvency can change.

Pay attention to all the expenses before applying for a mortgage and submitting an agreement. Sometimes a desire to buy a house has no financial basis. In such a way it can lead you to financial instability and even big debts. So, before making any serious decisions think about each financial aspect in detail. You can even apply for professional mortgage assistance, once you can’t revise your finance yourself. Any assistance is appropriate, as it can save you from big money loss.