The Financial Aspects of Home Buying
1. Down payment — The part of the property purchase price paid in cash and not financed with a mortgage. One thing to consider is that the larger your down payment, the lower your monthly mortgage payments will be.
2. Closing costs — Cash due at closing for expenses you and the seller pay to complete the transfer of ownership. Closing costs are typically based on the home price and vary according to location. They might include an origination fee, attorney’s fee, initial escrow payments, and charges for obtaining title insurance and a survey.
3. Monthly payments —When you are approved for a mortgage loan, you make a commitment to pay back the loan on a monthly basis. Your payment is based on both the principal — the amount of the loan — and interest — the amount you pay to borrow money, calculated as a percentage of the amount borrowed. It also includes money that may be held in escrow for taxes, home-owner’s insurance and mortgage insurance.
For more information on lending see our article on Home Purchase Loan Types.
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