Buyer's Guides: Budgeting
Fine tune your budget to decide how much you can afford
When you apply:
“Greg Holmes is national director of sales and marketing for Credit Plus, a company in Salisbury, Maryland, that provides credit reports to mortgage lenders. He says potential buyers should request their free credit report at AnnualCreditReport.com.
‘Some people who think they have good credit don’t, while people who think their credit is bad may be surprised that it is actually OK,” Holmes says. “Everyone should check their report for accuracy and fix any mistakes. It can take months to correct errors.’”
- Michelle Lerner, BankRate.com, 2015
Now it’s time to calculate your budget in more detail. To help you, here are three major costs associated with purchasing property.
This is how much you pay upfront. The larger the down payment, the smaller your mortgage. The standard down payment is 20% of the cost of the home, but other programs are available, especially for first time home buyers. Your real estate agent can help you determine which program is the best fit for you.
Monthly Mortgage Costs
Include the mortgage, homeowner’s insurance, mortgage insurance (if applicable), property taxes and escrow deposits, which can be combined with the monthly mortgage payment.
Include appraisals, title insurance, inspections, attorneys, title transfers and additional fees.