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The Whole Picture

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These days in most parts of the country, you can purchase a home and pay less for your monthly mortgage than you would pay for rent. That is why ownership is so very popular - you can build equity in your property, while still paying less on a monthly basis.

However, when looking at online mortgage calculators it’s easy to become confused, as they rarely provide a complete picture of all homeownership costs. In reality, it comes down to more than simply the amount you’ll send back to your lender each month for your loan.

What Does ‘Monthly Mortgage Payment’ Really Mean?

The principle and interest payment for your loan from the bank is a great starting point, but not the end of the conversation. You’ll be required to pay property taxes, which you can either roll into your mortgage payment each month, or pay to your city/town directly once or twice a year. You’ll also be required by your mortgage lender to carry homeowners insurance, which could add up to another hundred or more dollars a month.

The most common option is to pay your taxes and insurance to your mortgage lender through an escrow account, as part of your payment each month. Your lender will then make the required payments on your behalf to your city/town and your insurance company. As you can see, the amount per month that you’ll owe on your mortgage itself won’t give you a complete picture of what you’ll actually be paying out each month. But in most instances, ownership is still a better option than renting, financially.

But Wait, There’s More…

Utilities. Trash. Water. Many people pay their own utilities in a rental apartment or condo, but the costs for a single family home are often higher. Water and/or garbage pickup may also be included as part of your property tax bill, but these are items you’ll want to double check, in order to avoid being surprised down the line.

Listing these expenses is in no way intended to scare you away from home ownership. Quite the opposite; an informed homebuyer is typically a successful one, and will find the greatest value in today’s market. We simply want to make sure you understand the full cost of ownership, before you make what will likely be one of the largest financial decisions of your life.

This is why speaking with an experienced mortgage professional is so very important. They can help you to estimate what your total monthly payments will be - taking in all known variables - leading you down a safe path toward financial stability. Call us today.

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