Buying a new home can be a cumbersome task, but with proper calculation of the down payment and the closing costs the complexity can be resolved. In order to know what your new house will cost in the short and the long run you need to calculate the closing costs in addition to the initial down payment.
Calculating the down payment:
The amount required for a down payment is directly proportional to the borrower’s credit history, mortgage type as well as total cost of the asset (house in this case). For instance, if the cost of your home is $60,000 and your loan has been approved with a 3 per cent down payment, the required down payment will be 3 per cent of the total home cost. In this case it will be $20,000.
Calculating the Closing costs:
Calculating the closing costs is a step-by-step procedure.
Step 1: Add up all the costs that are associated with your loan which may include credit report, loan recognition, tax service, underwriting, home appraisal, flood certification fees etc.
Step 2: Add up all the title charges like the title policy fees, closing policy fees, courier fees etc.
Step 3: Add all the insurance and the interest fees that may be required at the time of the closing.
Step 4: Add all the escrow costs which are usually required by the lenders to confirm that the borrower has a certain sum of money always available with him.
Step 5: Add all the costs from step 1 to step 5 to the down payment to get the required closing costs.
Thus follow the above step-wise procedure to get rid of the bulky task of calculating the down payment and the calculating costs.