What Can i afford? - Royal Credit Union

What Can i afford?

It's about more than the payment

A home is typically the single largest purchase you will make in your lifetime. Obviously, one of the first steps in the decision process is figuring out what you can afford. While the purchase price is easy to see, what might not be as clear are the up-front costs involved, as well as the ongoing expense of home ownership. Keeping all of these things in mind is essential as you prepare for your purchase.

How much can I borrow? It's different for everyone. Your income, credit history, down payment, residence history, and employment are all key factors in determining the amount of your loan. Know these things ahead of time so you can identify any credit dings or dents now and work to fix them. (Looking for actual numbers? Check out our Mortgage Calculator at and see what's within your budget.)

What costs do I need to pay up front? Some of the extra costs associated with a home purchase could include:

Mortgage application fees - Some financials have application or origination service fees. These can be either a flat rate or are determined based on the total price of the home you are interested in. Additionally, the application cost may include appraisal, underwriting, and credit reporting fees. All of these are usually incorporated into the closing costs.

Earnest money - This is a deposit made to the seller to show your commitment to purchase. It helps fund your down payment and is especially helpful if there are other buyers interested in the same property as it may sway the seller's decision in your favor.

Down payment - Often, better rates are associated with higher down payments. The average down payment can range from 15% to 20%, but there are programs available to help.

Closing costs - Final closing costs typically range from 2% to 5% based on the total mortgage loan amount. Some closing costs can be incorporated into the loan amount. Closing costs include:

? Appraisal fees ? Escrow deposits ? Mortgage application fees (see above) ? Title insurance

? Attorney fees ? Discount points

? Inspection fees

? Loan origination fees

? Property recording fees

? Taxes

? Title search fees

? Underwriting fees

Expenses included with home ownership Aside from the mortgage payment, there are other expenses to keep in mind. These include:

? Mortgage insurance (required for most mortgages with down payments less than 20%) ? Home insurance ? Utilities (electricity & water etc.) ? Property taxes ? Repairs and maintenance

Planning and saving for your future home There are plenty of simple things you can do today to help you along the path of owning a home. Paying your bills on time and lowering your monthly debt can improve your credit score. Maintaining your regular income and saving money for a down payment can help your standing with your lender and provide a lower interest rate. Building this foundation can help make the process easier and help you compete better in the marketplace for that dream home. Good luck, and enjoy!

200 Riverfront Terrace ? Eau Claire, WI 54702-0970 ? 800-341-9911



 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download