When most people purchase a home, they are tied to that home for an average of 12 years. This isn’t out of obligation, but buying a house is a big decision, and it’s a financial investment. Deciding to sell it and move elsewhere is an equally big decision, and another financial investment. Because of this, most people decide to stay in one home for at least a decade before moving on. Buying a home is not cheap, and the different costs that go into this decision is something a lot of people don’t put a lot of thought into.
A down payment is the biggest sum of money that you’ll be expected to have when you purchase a home. The down payment is a portion of the cost of a home, usually either 10% or 20%. This is the payment that you provide to the seller of the home upfront, and then you get a mortgage(home loan) to cover the rest of the cost of the home. The larger down payment you can afford to pay initially, the lower your mortgage cost will be monthly.
Every month, you will be required to pay a fee to pay off the remaining balance of the mortgage you now owe to your bank. You can use a mortgage calculator to figure out how much you can expect to owe on a monthly basis. This can also help you find out what you can afford to pay every single month. If you have a fixed rate mortgage, the amount that you pay on a monthly basis will be consistent throughout the life of that mortgage.
In some situations, the seller of the home is willing to pay closing costs. Sometimes, they’re not. This is something that your real estate agent will help you negotiate, to help you get the best possible deal during the home buying process. Closing costs are a collection of fees that are charged by a mortgage lender and the third-party service that is in charge of all of the documents, and secure the financial transaction. Altogether, these fees can come up to 5% of the cost of the home.
When you own a home, just like any type of property, you’re responsible for paying taxes for that property to the government. Property taxes vary greatly depending on the area, so do some research before selecting your home to see what kind of property taxes you can expect to pay every year while living there. Some pay directly to the government quarterly or annually, and sometimes your mortgage company will take care of this payment.