What are the costs of home ownership?
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The cost of buying a home can be split into two groups: up-front and ongoing costs.
Up-front costs include a down payment, closing costs, and the price of moving in and
furnishing a home. Ongoing costs include mortgage payments, property taxes and insurance.
Up-front costs
Although 100% financing is available to qualified buyers, many borrowers typically pay a
down payment of three to five percent of the home’s cost. Five percent of a $110,000 home
would be $5,500 down. In addition, there are closing costs which typically cost three to
six percent of the mortgaged amount.
For example: after paying $5,500 for a down payment on a $110,000 home, a buyer might
need an additional $3,135 to $6,270 for closing costs.
You’ll want a nest egg too
You may also need to save up a cash reserve before you move in. Many loan programs want to
see that you have about two months worth of payments in your savings. The good news is
that—usually—retirement accounts can qualify for this condition of loan approval.
Saving up to buy a home can be a big hurdle for many would-be owners. We can help.
We offer free "mortgage counseling" to help members plan their steps towards buying a home.
Ongoing costs
Ongoing costs may be similar to renting a home; however, the difference can be quite an
adjustment for some. Along with a mortgage payment, you also have to pay property taxes,
home owners’ insurance, mortgage insurance (if required), utilities, and maintenance. There
may be additional fees associated with a home owners’ association. Mortgage payments depend
on the amount borrowed, the interest rate, the repayment length, and whether you select a
fixed or variable-rate mortgage. Here are a few examples of fixed-rate mortgage payments
(mortgage interest rates will vary from day to day, but rates can be locked in for up to 30
days from the time of approval):
| Loan Amount |
Rate |
Term |
Payment |
| $120,000 |
6.0% |
15 years |
$1013 |
| $100,000 |
6.0% |
15 years |
$844 |
| $80,000 |
6.5% |
15 years |
$697 |
| $140,000 |
6.5% |
30 years |
$885 |
| $110,000 |
6.5% |
30 years |
$695 |
| $100,000 |
7.0% |
30 years |
$665 |
| $80,000 |
7.5% |
30 years |
$559 |
*Monthly payment refers to principal and interest. Rate, for illustrative
purposes only, refers to annual percentage rate. Monthly payment example rounded to
nearest whole dollar.
When you start to furnish your new home
Many buyers get new carpet or furniture after they move in. After all, a fun part of owning
a home is being able to furnish it to your taste. Before you apply for a store’s credit
card, call Northwest Community about a line-of-credit
or VISA card. We offer low payments and low rates, and
we’re a sensible choice for home owners who want to be ready for "what if" costs.
To start building your dreams, contact your local
Northwest Community branch or call 1-800-452-9515.
Mortgage
payments often include a portion for property taxes or necessary insurance(s). This is in
addition to repayment on the principal and interest. Programs will have different plans for
holding these additional costs in separate escrow accounts; however, such plans are the
easiest way to help ensure that important annual expenses are paid on time.
**Northwest Community is providing
information about the First-Time Home Buyer Tax Credit for general awareness only and
not as legal or tax advice. Before you make any decisions, speak with a professional
legal or tax consultant to see how this credit would work in your particular situation.