Steps To Buying A House – Sample Payments

This article describes the first steps to buying a house: the 4 checks before closing, tax and insurance costs, and a list with sample payments.

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Steps to buying a house Steps To Buying A House   Sample Payments

Sample payments

Whether this is your first home purchase or one in a line of several over the past years, we would like to provide you with an overview of the steps to buying a house, including a list of sample payments.

Buying a home is an exciting process. It is important—going into the transaction—that you are aware of the costs you will incur when purchasing your home, as well as what your monthly payments will be once you are in your home.

First steps to buying a house

You will need to write four checks prior to closing on your new home. All costs are average and will vary with the price, size, and features of your new home.

  • Option Fee ($100–$500): Payable to seller at receipt of the contract. This will be credited toward your closing costs.
  • Earnest Money (1% of the sales price of the home): Payable to the title company at receipt of the contract. This will be credited toward your closing costs.
  • Inspection ($300–$500): Payable to the inspector at time of the inspection during the option period.
  • Credit Check and Appraisal ($400): Payable to the lender after the option period expires.

Next steps in your home buying process

The monthly payment (PITI) on your new home will include the principal and interest on the loan you receive from your mortgage company. In addition, you will be responsible for paying annual property taxes and homeowner’s insurance.

If you choose, you can have your taxes and insurance added to your monthly payment (some loans require this), or you can pay them on an annual basis.

The table at the right will give you an idea of the monthly payment you can expect, including your loan principal and interest (P & I) based on a 30-year fixed-rate mortgage at 7% interest.

Taxes and insurance will vary greatly depending on the area in which you live and the features of your home. Generally, on a $100,000 to $200,000 home, your taxes will range from $2,000 to $4,000 annually and your homeowner’s insurance will range from $300 to $800 annually.

Once you have found the home you wish to purchase, your lender will complete a Good Faith Estimate for you that will better approximate your closing costs and estimated monthly payment.

Feel free to contact David Schneider or Philip Myers with any questions you may have.

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