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While these costs will vary from home to home, you’ll want to know what they are before making a final purchase offer.
1) monthly principal reduction payments
2) your home potentially increasing in value over time
You may be able to deduct your interest and property tax (consult a tax advisor to further discuss)
Depending on the amount you have saved for a down payment, your mortgage payment should typically be no more than 28% of your monthly income, and your total debt should be no more than 36%, although debt ratios have some flexibility, depending on the mortgage type you choose.
Generally, a better credit score will help you get a better interest rate on your mortgage. And even a small improvement in your score can have an impact on your monthly payment and potentially save you thousands of dollars over the course of your loan.
Lastly, you’ll need to have some money tucked away for extra costs beyond your monthly mortgage payment. These costs include your down payment and closing costs.
It helps you determine how much house you can afford and how much money you can borrow. That way your time won’t be wasted looking at out-of-reach properties.
To establish your employment history and financial capabilities, you must provide the lender with the following income documentation:
Use our House Hunters Checklist to help with your home search.
It’s important to find a real estate agent who will:
You might also consider hiring a real estate attorney to:
Once the seller accepts your offer, you may strongly consider hiring a certified home inspector who can verify there are no structural problems, code violations or other undisclosed concerns. When your contract is final, your lender will have the property appraised by an independent, third-party appraiser who will confirm the fair market value of the home.
In addition, a title search will typically be conducted to:
Buying your first home is a big financial step. You’ll want to consider the added financial responsibilities, including things like moving costs, home repairs, landscaping, property taxes and insurance. You should have a steady income, manageable debt and feel confident you will stay in one place for awhile.
Start by assessing your income. Then consider liabilities like student loans, credit card balances and auto loans. Ideally, the amount of your monthly debt payments, including your proposed mortgage payment, should be equal to or less than 36% of your gross monthly income. And remember to budget for a down payment (typically 5% to 20% of the purchase price) and closing costs (usually estimated at 2% to 3% of the purchase price).
During the closing, you’ll meet with all parties involved in the sale to make it official by signing documents, receiving the deed and paying your closing costs, which may include:
Property insurance: Also called homeowner's insurance, property insurance protects the homeowner from losses to the property, as well as potential liability from events that occur on the property and elsewhere. Lenders require homeowner's insurance coverage to protect the collateral that secures their loan. Some homeowner's insurance policies do not cover catastrophic events such as tornadoes, hurricanes or floods. These kinds of events generally require a separate insurance policy. Sometimes additional insurance may be required for your loan.
Property Taxes and Homeowner's Insurance: A typical monthly mortgage payment consists of amounts for loan principal, interest, taxes and homeowner's insurance. Taxes and insurance are usually paid from an escrow, or impound, account.
Homeowner’s insurance provides financial coverage in the event of a covered loss to your home, other structures or contents. In addition, homeowners insurance provides personal liability coverage for third-party claims.
Insurance designed to protect your home in the event a natural disaster such as fire, flood, earthquake, hurricane or tornado were to strike and cause your home to become unlivable.
Mortgage Life Insurance & Mortgage Accidental Death Insurance
Mortgage life insurance pays off or reduces your mortgage loan balance (up to the policy maximum) in the event of death before the debt is paid, enabling surviving family members to retain their home. Mortgage accidental death insurance pays off or reduces your mortgage loan balance (up to the policy maximum) if your death is the result of a covered accident.
Private Mortgage Insurance
Insurance written by a private company to protect the mortgage lender against financial loss if a borrower defaults on the mortgage.
FHA Mortgage Insurance
An undertaking by the Federal Housing Administration (FHA) to insure the lender against loss if the borrower defaults on the mortgage.
VA Funding Fee
This fee is paid by the Veteran and/or third party, directly to the Veterans Administration, to guarantee a specified portion of the loan, should the borrower go into default.
Protection against flood loss through the 1973 Flood Disaster Protection Act.
Throughout the mortgage process you'll be working with a Mortgage Loan Office (MLO). A MLO will keep you abreast of your loan status, make sure that you are submitting the proper paperwork, and guide you through the application process.
If you have a MLO in mind, you can search for them in our database below. Or, you can find a MLO in your area to work with.
Final loan approval and amount are subject to verification of loan data, property appraisal and underwriting conditions
*Consult a tax advisor regarding the deductibility of interest
PNC, PNC HomeHQ, PNC Home Insight, and Home Insight are registered service marks of The PNC Financial Services Group, Inc. ("PNC"). PNC has pending patent applications directed at various features and functions of Home Insight Planner and Home Insight Tracker. All loans are provided by PNC Bank, National Association, a subsidiary of PNC, and are subject to credit approval and property appraisal.
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