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What Your Mortgage Will Really Cost You

By Karen Godfrey

When you are planning to purchase a home, you not only need to shop for the home, but the mortgage as well. Every state is different, and Vermont’s real estate market varies from town to town. Examine all mortgage programs available. In addition to the considerations below, is there anything else you will be adding to the mortgage? For instance, some extra cash for immediate improvements you want to make? How long are you going to living in the home? Is this a first time home purchase? Also, are you eligible for any government home purchasing programs?

How much mortgage can you afford? This is the first question, and the first calculation you should make. This will give you an idea of what price range of home you can afford, before you become attached to something you cannot buy. Use this calculator to help you determine what you should be aiming for.

What type of mortgage fits your budget? There are three different types of mortgages:

  • Fixed Rate
  • Adjustable
  • Balloon

These three affect the cost of the mortgage. Decide which one of these mortgages will best suit your financial needs, they all have their pros and cons.

  • A fixed rate mortgage has an interest rate that stays the same during the entire term of the loan.
  • An adjustable rate mortgage has an interest rate that fluctuates based on the market.
  • A balloon mortgage leaves a balance at the end of maturity because it does not amortize.

What is the monthly cost of my mortgage? Now that you have made those two decisions, you need to estimate the monthly mortgage payment you will be making.

Purchasing a home is probably the largest purchase you will ever make. Make sure your broker is licensed. After taking all of these things into consideration, you will be able to buy with more confidence.

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