Buying a house is not just about the down payment and signing a few papers. The true cost of mortgage loans involves multiple free. You need to have some extra cash saved up to cover unforeseen costs.
The frees that you can expect for a mortgage contract include several things. Before anything, you will need to pay an appraisal free. This fee can range from $300 to $450 depending on the size of the house. Besides the appraisal free, you should set money aside for a credit report fee which is about $25, and an origination fee that is usually $125.
Besides the two above mentioned fees, you can expect to pay an application fee that is usually a couple of hundreds of dollars.
Tile search is another cost that you will need to take into account for your mortgage. This fee can get as high as $450.
Lastly, there will be a few fees that are expressed in percentages of the loaned amount. Title insurance is up to 1%. The underwriting fee is about 0.5%.
In total, you can expect to pay up to 5% of the value of the home in just fees. All these costs need to be accounted for as mortgages can become expensive depending on the value of the house. All these costs should help you better what type of house you can afford.
- Down payment
The second cost you need to take into account is the down payment. How much you want to pay as a down payment is up to you but it should be at least 15% of the value of the home. The more you pay the better the interest you can get. The differences are marginal but they should not be neglected. Your total cost of a mortgage can be as high as 25% if you decide to go for a down payment of 20% and add the fees on top.