In comparison with paying rent, it feels more enticing to pay for a mortgage. Prior to determining whether its possible for you to be a homeowner, you must identify the various costs involved in owning your home. 

 

The day you turn out to be a homeowner, you'll neither have to resolve your problems nor call up your landlord.

 

You'll need to do the following for determining whether its possible for you to buy a home:

 

1. Determine the property value of homes that interest you. The property value (what the home is worth) is determined by comparing the prices of homes recently sold of similar size in the same neighborhood. Your real estate agent will be able to provide this information to you.

 

2. Mortgage loans would come under various types; depending on the available funds, you must compare the necessary down payment amounts. The nature of mortgage you choose and a fraction of the property value are taken into account while determining the amount of down payments. Down payments are meant to range between 3-20% of the value of property. Private mortgage insurance plays a key role in enabling the mortgage lenders to recoup a portion of their losses in the event the borrower defaults in his loan repayment.

 

3. Obtain an estimation of the closing costs; this includes financing costs, title insurance, prepaid loan interest, inspections, recording, taxes and points. Over here points refer to the amount of dollars received by a lender for holding a lesser rate of interest over a loan; a point is calculated as one percent of the amount borrowed. Title insurance is regarded as the policy that covers the home owner for his title search errors; on the other hand, policy cost is determined as a function of the property value.