Just because you've been preapproved for a certain amount doesn't mean you have to max out that loan with your first home. In fact, you may not want to spend every penny on your home loan every month. When considering how much house you can afford, here are some other costs to be aware of:
- Mortgage payments are the monthly payments you make to the bank to pay back your loan. Often these payments include not just the principal and interest on the loan, but also property taxes and homeowners insurance. If your lender does not collect and pay out your taxes and insurance, you'll be responsible for them yourself.
- Closing costs, which are paid at the loan closing, might include lender and attorney fees, flood or title insurance, and any up-front interest on your loan -- called points.
- Your new neighborhood may have a homeowners association with required monthly or annual dues.
Keep all of these expenses in mind as you're shopping for a new home, and talk to your real estate agent and lender about any other unexpected expenses to expect.