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Originally Posted by Schneed10
TAFKAS,
Always buy if you can swing it. You will be able to deduct the interest you pay on your mortgage, giving you a bigger tax return each year. You will build up equity on your home which you will retain when you sell your home. And as your home appreciates, you take all the profit.
Here is a table showing what your monthly payments would be if you bought a home. So the monthly payment on a $100,000 mortgage is about $600. Now you'll have a monthly escrow payment in addition to that. Escrow typically covers your homeowner's insurance, real estate taxes, township fees and other crap like that.
$ Borrowed - Mortgage Payment - Escrow - Total Monthly
$100,000 - $600 - $150 - $750
$120,000 - $720 - $200 - $920
$140,000 - $840 - $250 - $1090
$160,000 - $960 - $300 - $1260
$180,000 - $1080 - $350 - $1430
Lenders have all kinds of options for you. You may be able to get 100% financing, meaning you won't need to make any down payment. Or you can put 5% down, or if you can put 20% down you'll get the cheapest rate/PMI expenses. Thing is, in addition to the down payment, you will have to pay "closing costs" on the transaction up front. This means that even if you're making no down payment on the home, you'll have to pay $3000 - $10,000 (depending on the price of your home) in closing costs. There's no getting out of closing costs, at least not to my knowledge.
If you're going to buy, make sure you shop around for a mortgage company with low closing costs, there are a wide range. A lot of the times, smaller mortgage companies have to hit you with bigger closing costs to help cover their expenses. A bigger mortgage firm can offer lower closing costs. I went with Chase, I was pleased with them. Plus with a big company like that, you know they won't sell your mortgage to another bank or something crazy like that. Canthetuna can probably shed more light on mortgage companies since his wife does that stuff.
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those payment figures are on the money... a fixed rate loan is usually the best bet, since it can never go up and you can always refinance if the fed rate goes down. (and getting a place, i get calls for a 1.25% refinance all the time, problem is its 1.25% for 6 months then jumps to 7-10% and can't be paid off early - ALWAYS ignore those calls, its indian call centers being paid to look for suckers)
sometimes sellers will pay closing costs (not usually in a sellers market though) and the buyer just pays more into the price (this is another thing you can add to the contract but it'd make it less likely to win in a competition)...