Before you begin house hunting, it's important to know how much home you can afford to buy and then live in. Once you understand all of the factors involved in purchasing and maintaining a home, you'll be able to search the properties that fit your budget today and in the future.
You've found a property that you love and you're ready to make an offer. After you have come up with an offer price, the next step is to determine how large a deposit you want to make with your offer. You want the "earnest money deposit" to be large enough to show the seller you are serious, but not so large you are placing significant funds at risk. Keep in mind that this money will be tied up throughout the entire purchasing process, so the less you offer means the less you have at risk. On the other hand, a larger earnest money deposit will often attract a seller over a similar offer that includes a smaller deposit. It's important that you balance the risk and the strength of the deposit and make the choice that's right for you.
The down payment is the portion of the purchase price that you will pay in cash instead of including it in your mortgage. On some programs, St. Mary's Credit Union will allow down payments as small as 3% of the purchase price, but Private Mortgage Insurance (PMI) may be required. Speak with a St. Mary's Lending Expert today to better understand PMI and how it will affect your mortgage payments.
When you get pre-qualified for a mortgage from St. Mary's Credit Union, you'll know how much you qualify to borrow for your new home. With this figure in-hand, you'll be able to narrow down your property search to the homes that you can truly afford.
There are expenses associated with your mortgage transaction known as "closing costs." These closing costs may include appraisal fees, attorney fees, title search service fees, escrow fees, homeowner's insurance, Private Mortgage Insurance (PMI), mortgage origination charges and any points that you are paying to lower your rate. When you apply for a St. Mary's Credit Union mortgage, you will receive a Good Faith Estimate (GFE) that will outline all of the closing costs attached to your mortgage.
Here's a Mortgage Affordability Worksheet.
Here's a Mortgage Budget Worksheet.
Use this handy Payment Calculator.