Kay Monigold, Author at Avenue Mortgage, LLC

3 Closing Costs That Most Buyers Forget to Factor in and What You Can Expect to Pay If you’re in the process of buying a home, you probably have your deposit and monthly mortgage charges in a spreadsheet, along with a chart of your other expenses and your monthly income. But when it comes to buying a home, there are lots of different costs that will come into play – and it’s easy to forget something. When you’re preparing to close on your new home, make sure you consider these three closing costs that most buyers forget.

Home Inspection Fees: A Small Charge For Peace Of Mind

Most home purchase agreements are contingent upon a successful home inspection – and if you’re planning to buy a home, you should definitely have it inspected before you buy it. However, home inspectors don’t work for free, and you’ll have to pay a home inspector for a thorough evaluation of the premises.

Home inspection fees depend on the kind of property you’re buying, and can vary depending on your location. For a condo unit, you will typically only need to pay about $250, but a single-family home might cost up to $500. Luxury properties are often more expensive, sometimes even running as high as $1,500.

Private Mortgage Insurance: Obligatory With Small Down Payments

If you’re only planning to make the minimum down payment on your home, you’ll need to buy mortgage insurance. Mortgage insurance protects the lender in the event that you default on your loan. This is an added cost that your lender pays, and in general, almost every lender will pass the cost on to you.

You can pay for your mortgage insurance in one large payment, or you can add it to your monthly mortgage payments. Note that if your down payment is less than 20% of the purchase price, you’re legally required to buy mortgage insurance.

Lender Fees: Additional Fees to Process Your Mortgage

One category of closing costs that buyers often forget is lender fees. Lender fees are fees that your mortgage lender will charge for processing the transaction of the loan. These can include appraisal fees, credit report fees, processing and application fees, and administration fees for underwriting.

These fees can range depending on the lender, but in many cases they exceed $3,000. You’ll want to budget about $3,500 to $5,000 to be safe.

Buying a house is a major undertaking, and there are lots of ways that the process could go awry. But a good mortgage professional can help you navigate the process and get the home and the mortgage you’ve always wanted without any issues. Contact your trusted mortgage expert to learn more.

The Down Payment: Four Great Reasons To Make The Largest Down Payment You Can Afford If you’re looking for a new home, you’ve probably heard lots of advice about down payments. About how it’s okay to just have a five percent down payment – you’ll still get approved. About how you should make the down payment as small as possible to avoid cash flow problems.

In truth, you’re actually better off making the largest down payment you can possibly afford. Even if you have to slice up other areas of your budget, save for a few more years before you buy, or take a second job on the weekends, it’ll be worth it in the end. Here are just four reasons why you should make the largest down payment possible.

You Can Avoid Useless Insurance Premiums

Although you can buy a house with as little as a five percent down payment, it’s in your best interest to make a much larger down payment if you can. Mortgage insurance premiums can be as high as one percent of the loan’s value, which means until you’ve invested 20 percent of the home’s value in equity, you’ll have to pay an extra one percent every year. If you pay at least 20 percent of the purchase price upfront, you’ll be able to avoid having to get private mortgage insurance – so you keep more of your money in your own pocket.

You’ll Pay Much Less Interest

The less you have to borrow, the less you have to pay back – for more reasons than one.

When you take out a mortgage, the interest rate applies to the principal amount that you owe – and over time, the interest can run on top of interest, quickly outpacing the original sum. Having a larger down payment means the interest applies to a smaller sum. And that means it accumulates slower and ends up being a smaller amount over time.

You’ll Have More Ammunition In A Bidding War

Offering up a larger down payment is also a great way to make sure you get your dream house, especially if it’s a popular property with multiple offers. The seller isn’t just going to consider who offers the most money – they’re also going to consider which buyer is most likely to get a mortgage. After all, failing to get a mortgage is one of the most common reasons why real estate deals fail.

If you can show that you’re able to make a larger down payment, you’ll have a better shot at getting a mortgage – and that means sellers will prioritize you over other buyers.

You’ll Get A Great Start On Building Equity

Your home equity is equal to the difference between your home’s fair market value and the amount of debt invested into the home. If you don’t have enough equity in your home and home prices in your neighborhood fall, you may find yourself in a situation where you owe more money on your home than it’s worth – a phenomenon known as negative equity. By making the largest possible down payment you can, you’ll have a great head start on building your home’s equity – which may help you profit if you decide to sell in the future.

Buying a house isn’t easy, but making the largest down payment you can afford will give you a great financial head start on home ownership. Want to learn more about how to afford the home of your dreams? Contact your local mortgage professional today for practical advice to help you maximize your down payment.

3 Closing Costs That Most Buyers Forget to Factor in and What You Can Expect to Pay

The Down Payment: Four Great Reasons To Make The Largest Down Payment You Can Afford

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