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May 7th, 2009

Homebuying Costs to Consider

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Federal interaction and incentives combined with the dismal conditions of the housing market have concocted the “perfect storm” for eager first-time homebuyers shopping for a great deal. Mortgage rates are at historic lows, first-time buyers can take advantage of an $8,000 tax credit, home prices are tumbling, and home owners are eager to sell. Could the time be any more right?

Before you jump in with both feet, here are a few important factors to first consider:

  1. Credit Score: Before you start shopping, make sure your credit score is at least above 640. If your score is below that, you should expect lenders to charge you a significantly higher interest rate. Click here to find out how your credit card use impacts your credit score.
  2. Down Payment: Since credit and housing conditions remain strained, lenders are demanding a larger down payment. Borrowers who don’t put down 20% are forced to purchase mortgage insurance (MI). MI can add upwards of $100 a month to your mortgage payment. Can I use my first-time homebuyer’s tax credit as my down payment?
  3. Fees: This is another instance when having good credit is a plus. Newly introduced fees by Fannie Mae and Freddie Mac will increase your interest rate if, among other things, your credit score is below a certain number. Also, standard closing costs can average a couple thousand dollars depending on your loan. Read Marc Eisenson’s article on 25 steps to save money at closing.

Looking to refinance? Be sure to read “How a Refi Could End Up Costing You.”

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One Response to “Homebuying Costs to Consider”

  1. What is a Mortgage? Home Mortgages Defined | The Home Mortgages Blog Says: May 8th, 2009 at 3:38 pm

    [...] Homebuying Costs to Consider [...]

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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