There is more to a house payment than a buyer fixating on a rate, down payment, and a mortgage amount. To avoid payment surprises, buyers need to look at other items such as property taxes, homeowners insurance, private mortgage insurance, flood insurance and HOA dues as well as other potential costs with home ownership. I am sorry for being a Debbie Downer, but utilities, along with deferred maintenance inside and outside the home (deferred maintenance commonly may equal to 1-2% of home’s value needing to be set aside per year) are needed as well.
At the closing, having not only the down payment that most loan program will require (3% – 5% down is most common but some lenders will have an option as low as 0% down), a buyer will need funds for closing costs (underwriting, processing fees, along with third party fees for title companies and appraisers etc). You will also need an escrow for deposits for property taxes, home insurance, and any other insurances.
This only touches the surface of what a first-time homebuyer may be facing. To avoid making a big financial mistake get lined up with a home lender in your corner that can educate you and lead you down the right path. Some may rely on A.I. for answers, but A.I. is only as good as the questions you input. Finding a lender with experience that is looking out for your best interest is essential in today’s market. Home ownership takes a lot of preparation but it will be worth it in the end.
Good luck with your path to home ownership! 🏘️
By: Troy Arenz