Buying your first home is an exciting time in your life, but it can also bring some worry. The process is overwhelming at times, so first-time homebuyers often don't know exactly what to expect. When analyzing the cost of a home, you may forget to incorporate some of the other costs that come with the process. One of these costs is a down payment, which is nearly always required on a mortgage loan. Although 20% is a common goal, many lenders permit you to put down less. Doing so may result in the payment of private mortgage insurance, which would add to your total monthly payment.
Although you may qualify for a higher loan than you expect, make sure to consider how much you can actually afford. Some of the costs you may have to pay in addition to your estimated monthly payment include mortgage insurance, HOA fees, homeowner's insurance premiums, and property taxes. Factor these into the total monthly payment so you know how much you'll actually have to pay.
When you close on a mortgage loan, you'll likely have to pay the closing fees in addition to your down payment. Some lenders will roll the closing fees into the loan, but this means you'll be paying interest for 15 or 30 years on those costs, depending on which loan type you choose. Closing fees vary, but your lender can give you an estimate of what you'll have to pay.
Moving also comes with a cost. Even if you do it yourself, you'll have to pay for the boxes and packing materials, along with the cost to rent a truck to transport your items.
As you go through the process to buy your first home, being prepared and understanding what costs to expect can help you feel less overwhelmed. You can also walk into your new home knowing you can afford the monthly payment and enjoy the many benefits of homeownership.