A real estate purchase includes costs more than just the sale price. Here are other considerations to include in your homebuying budget.
Some lenders require a significant down payment at closing. While it can take time to save that much, paying a lump sum up front will lower your monthly payment.
Your payments will cover principal, interest, taxes, and insurance. You may also have other recurring expenses, such as homeowners association dues, that you should factor into your budget.
If you don’t pay at least 20% of the purchase price as a down payment, your lender will probably require you to pay private mortgage insurance (PMI). This isn’t insurance for you—it protects the lender if you default on the loan.
A buyer and a seller can negotiate how much each party pays at closing. But unless the seller agrees to pay all of the closing costs, you’ll be responsible for paying a portion of these fees.
When you’re ready to become a homeowner, contact a REALTOR® to determine how much you can realistically afford.