Our President Scott Ford was interviewed by Forbes on the several factors that you should consider when buying a home. In case you missed the article, here’s a recap:
1. Down Payment
Take a look at your finances to see how much you are willing to put down on a house. This will actually in turn impact how much you’ll pay overall. The larger the down payment, the cheaper the total cost of your house will be.
2. Closing costs
Closing costs are the total cost that is associated with processing your loan. Not all lenders charge the same amount for services, so always be sure to do your research.
3. Private Mortgage Insurance
A private mortgage insurance, or PMI, is a type of insurance that borrowers who put down a certain amount of money towards a house pay to offset the lender’s risk. This protects the lender, and in the event that you don’t pay your mortgage, they have the right to sell the house.
4. Earnest Money
This is the deposit that buyers must pay in order to show the homeowner that you are serious about buying the house. This is held in escrow to be put towards your down payment or closing costs.
5. Escrow Account
Along with having to pay a PMI, borrowers who put down a certain percentage of their down payment are required to pay the first year’s insurance policy premium as well as property taxes.
6. Homeowner Association Fees (HOA)
An HOA is responsible for making and enforcing rules of a housing complex or community. This can cost anywhere from $50 to $400 depending on property and location, though Ford states that “it’s very difficult to live in an HOA of any size with adequate amenities for less than $50 a month”.