Home loans come with more expenses to prepare for than just your monthly payment.
Closing Costs:
When you close on your loan, you’ll pay one-time expenses known as closing costs. These costs can cover a variety of fees, including title insurance, origination fees, appraisal fees, and more. On average, closing costs usually range from 3% to 6% of your total loan amount.
Down payment: Your down payment is an initial investment into your home. This is generally 20% of the total price of your home – if the home you are looking to buy is $200,000, you would put down $40,000.
If you don’t have the funding to put down a large down payment, there are other options! Your down payment can be as little as 3% when you use Private Mortgage Insurance.
Insurance: If your down payment is under 20%, you are required to get Private Mortgage Insurance (PMI), a type of insurance whose premium is determined by your loan type, credit score and loan to value ratio. This is paid monthly as a portion of the total mortgage payment.
PMI remains on the loan until there is sufficient equity in the home allowing the homeowner to request cancellation. At 78% Loan to Value, PMI is automatically terminated.
Other costs: Consider other costs of homeownership, such as
Curious about what loan might best fit your budget? Check out our mortgage calculator to get started.
