The prospect of becoming a proud homeowner is an exciting one – but with so many options available, it can be overwhelming too.There’s a lot to understand about mortgages and the terms behind them. What type of mortgage is best? How much will you really pay in interest? How much home can you afford? These are all great questions – but there’s no “one size fits all answer”. There are, however, several things you can do to help make sense of the home buying process.
Using Financial Calculators
There are a wide variety of online financial calculators that can help you crunch the numbers and try out different home loan payment scenarios. Simply answer a few basic questions, such as how much of a down payment you want to make, what the property taxes are for your area, and what type of mortgage you’re interested in, and the calculator can help you determine how much you’ll pay each month. And that’s not all. You can also use mortgage calculators to see how much you’d save in interest by making scheduled pre-payments once a month or once a year, and determine the right home price for your budget.Aurora Bank (Equal Housing Lender, Member FDIC) has many different home loan calculators that you can use.
What Are the Added Costs?
There are several smaller costs that can quickly add up if you’re a first time home buyer. There’s PMI, which is mortgage insurance that the lender will require if you are paying a lower down payment amount on the home. This insurance helps protects the lender’s losses in the event a default. (It is important to understand that this insurance does not protect you as the borrower.) There are also closing costs to consider, and property taxes as well as home insurance costs to factor into your budget. It can seem overwhelming, but many home loan financial tools and lending experts can help you create a manageable budget that will help you realize your dream of home ownership along with a payment plan that’s realistic and attainable.
How Much Can You Save?
Because everyone has different expectations, financial needs and home requirements, there’s no perfect answer to “the best home loan” question. What you can count on is that your lender is willing to work with you to develop a plan that helps you reach your dream of owning a home. Take the time to do your research, learn what you can afford, and then consult with a lending professional on the next steps. Together, you’ll be able to create a customized plan of action that works for you.