Purchasing a home is a very exciting time.
When you’re well-prepared, you can make financial decisions with confidence. One of the greatest benefits of homeownership is the chance to build equity every time you make a mortgage payment. Many people believe owning a home costs more than renting, but in many situations, mortgage payments can be similar to, or even less than, monthly rent.
How much house you can afford
The first step in finding the right home is to determine your purchasing power and calculate how much you can comfortably pay each month. This helps you focus on properties within your price range and saves valuable time. During the planning stage, it is also important to consider both the upfront and ongoing costs associated with homeownership.
Some up-front costs include
Down payment
Typically ranges from 3-30% of the cost of the house. The more you can put down, the greater equity you will have in your home and the lower your monthly payment will be. For down payments less than 20% you may also need to pay mortgage insurance.
Closing Costs
Typically range from 2-6% of the loan amount depending on your area.
On-going Costs
Your housing costs can include the following: monthly mortgage payment, homeowners insurance, mortgage insurance, flood insurance (if applicable), property taxes (if applicable), utilities, maintenance.