Financing a House is more than just a Mortgage
Embarking on that journey towards home ownership can be a financially draining exercise, which can be further compounded if no initial preparation was made for all the associated costs for a home purchase. While the bulk of the financing is likely to be handled by a financial institution through a mortgage loan, many persons are caught off guard scrambling to find funds to satisfy mandatory payments, which are separate from the cost of the purchase.
For financing below 100 percent, borrowers are required to make an initial deposit of the difference to the vendor to begin the process of acquisition and financing. And, in cases where a financial institution is willing to provide 100 percent financing, there are still cases where vendors request an up-front deposit of between 10-20 percent of the cost of the property. And in these cases, buyers could be asked to pay this amount, based on the agreement that they will be reimbursed by the financier during the disbursement stage.
In addition to deposits, there are also mandatory closing costs that are funds used to facilitate and close the transaction. Some of these fees include underwriting, legal, title insurance and transfer, as well as property appraisals.
Therefore, as part of your planning process, in addition to finding out what your monthly mortgage payments are expected to be based on the cost of the unit, you should also do some research to find out what is likely to constitute a closing cost and the estimated cost associated with each item.
Qualifying for the mortgage and being able to finance mandatory payments will put you in good stead on your journey towards home ownership, making it a much more pleasant and exciting experience.