Understanding mortgage costs is crucial to setting a realistic budget and preparing for the financial journey of homeownership. At Texas Lending Solutions, we’re here to make the mortgage process transparent and accessible. In this guide, we’ll break down the primary costs associated with a mortgage, from closing costs to property taxes, so you can confidently plan for your home financing.
Closing Costs
Breaking Down the Costs to Close on Your Dream Home
What are closing costs?
Closing costs are a variety of fees that come with finalizing a home purchase, covering services that ensure a smooth, legal transfer of ownership.
How much can I expect to pay in closing costs?
Typically, closing costs range from 2% to 5% of the loan amount, which could mean between $5,000 and $12,500 for a $250,000 mortgage. At Texas Lending Solutions, we’ll provide you with a Loan Estimate early in the application process, outlining estimated costs so there are no surprises at closing. For a comprehensive overview of our loan options and associated costs, visit our Loan Options page.
Common closing costs include:
- Appraisal fees: To confirm the property’s market value.
- Title search and insurance fees: To verify and protect clear ownership.
- Lender fees: Charges from Texas Lending Solutions for loan processing.
- Attorney fees: Legal fees for title examination or closing document preparation.
- Property taxes and homeowners insurance: Required for escrow accounts.
Private Mortgage Insurance (PMI)
Protect Your Future, Unlock Your Dream Home
What is PMI?
PMI safeguards lenders in case a borrower defaults on their loan. It’s typically necessary when your down payment is less than 20% of the home’s price. To bypass PMI, you can aim for a larger down payment. Check out our Conventional Loans for solutions that could help you avoid PMI altogether.
How can I avoid PMI?
Making a down payment of 20% or more eliminates PMI costs entirely. For buyers seeking flexibility, Texas Lending Solutions offers programs with low-down-payment options, so you can decide if PMI fits your financial strategy.
Ready To Take the Next Step?
Texas Lending Solutions is dedicated to providing you with clear answers to all your questions about mortgage costs, guiding you through the complexities of financing, and offering personalized support to help you confidently start your journey to becoming a homeowner. Contact us today!
Escrow Accounts
Securely Manage Funds with Ease
What is an escrow account?
An escrow account is a separate fund set up by your lender to manage recurring costs like property taxes and homeowners insurance. Texas Lending Solutions establishes escrow accounts to simplify these payments and protect your investment.
How does an escrow account work?
Each month, a portion of your mortgage payment is allocated to your escrow account. Texas Lending Solutions then uses these funds to pay your annual property taxes and homeowners insurance directly, helping you avoid large lump-sum payments and ensuring these obligations are met on time.
Property Taxes and Homeowners Insurance
What Every Buyer Needs to Know
How do property taxes and homeowners insurance impact my monthly payment?
Monthly mortgage payments generally include estimated amounts for property taxes and homeowners insurance, which are stored in your escrow account. At Texas Lending Solutions, we calculate these amounts based on local rates and current insurance quotes.
What factors influence property taxes and homeowners insurance costs?
- Property Taxes: Determined by the assessed value of your home and local tax rates, which can vary significantly by location.
- Homeowners Insurance: Premiums depend on factors such as the home’s location, construction quality, and selected coverage levels. Texas Lending Solutions can help you evaluate these costs in detail so you can make informed choices about your monthly payments.
Get Your Free Consultation
Empowering Your Homeownership Journey with Texas Lending Solutions
Navigating mortgage costs doesn’t have to be complex. Texas Lending Solutions is committed to guiding you through each step, ensuring you understand every cost associated with your mortgage. Whether you’re a first-time buyer or refinancing, our team is here to help you make the best financial decisions for your future.