Owning a home is a valued investment which can offer financial advantages. Because homes generally increase in value, each payment you make is an investment in your future. Even if your home doesn’t appreciate much, which is rare, you will benefit from the monthly forced savings that result from paying down the remaining balance due on your mortgage.
With each monthly payment, home equity is built – the difference between what your home is worth now and what you paid for it. When you sell, your equity is your profit. This gain can help you purchase your next home perhaps moving up to a larger or nicer one. Or, [insert comma] you can tap into the equity for college tuition loans or retirement needs at a rate that is generally lower than available on personal loans. Additionally, making payments toward, and ultimately paying off a mortgage is an excellent way to establish a good credit rating.
Perhaps the most tangible yet greatest treasure of homeownership is the personal satisfaction of living in a home that you own. You are free to keep pets, plant a garden and remodel or redecorate to reflect your personal style. A home gives you and your family a feeling of stability and commitment.
A special sense of security and satisfaction comes as you begin to put down roots in a neighborhood.
The answer to this question is based on two facts (1) How much you feel comfortable spending on a monthly basis after surveying your budget and spending habits and (2) How much your lender calculates you can afford based on your income and debt obligations.
It is important to understand how a home is financed. These are crucial elements: (1) a down payment (2) closing costs and (3) the mortgage. When you know the amount of down payment, closing costs and monthly mortgage payments, you can better determine how much house you can afford.
A down payment is the money you pay up front toward the house. The higher the down payment, the lower the monthly payment and interest fees.
Fortunately, home buyers today no longer have to climb a financial mountain – saving for the traditional 20% down payment – before purchasing a home. There are a number of alternate programs available.
Closing is when ownership of your new home is officially and legally transferred from the seller to you and documented locally. Sometimes sellers will pay closing costs. Some fees may be negotiable between the Seller and Buyer.
These costs can be generalized into three categories.
Overall closing costs vary from state to state. Check with your agent for a list of credible lenders that you can speak with for an estimate of your closing costs.