Many of my friends have a good handle on the costs of running a household. Food, meals, gas, are all costs we encounter on a weekly basis and items that we look towards when cutting back on our spending. However these is one major expense that we give little thought towards. And one that can potentially save as a lot of money. That is the costs associated with a mortgage loan. And there are many factors that make up the cost of a mortgage loan. These include the cost of the property, the down payment, the closing costs, the total loan amount, the interest rate, the loan period etc.
The mortgage loan amount is the money supplied to the lender by the lending institution. The interest rate is the percentage amount they make for supplying the loan. Now the interest rate can be influenced by many things including the home buyer’s credit rate, the length of the loan etc. This all affects the monthly payment that will eventually pay back the loan.
The closing costs of the property purchase are usually in the realm of five percent of the mortgage loan amount. This is an important consideration when calculating how much of a home you can afford. Closing costs include many things associated with the purchase of your home – appraisal fees, escrow fees, various property taxes, title insurance and originating fees are all included in the closing cost figure.
Closing costs are unavoidable when purchasing a property. As well as the lender there are multiple parties involved in the closing process and they all charge a fee for their services. Therefore expect to pay the closing costs when you pay the down deposit on your home. After that you will be left with your monthly mortgage payments which are made over the period of the loan.
To help you assess the costs associated with the purchases of a property consult a mortgage payment calculator which will help you evaluate your different options and payment amounts.