Q & A with Dottie Herman

---

Q1 - How much money will I have to come up with to buy a home?

A - It depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover these costs: earnest money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to contract and/or settlement; and closing costs, the costs associated with processing the paperwork to buy a house such as title insurance and state and local taxes related to property transfers.

---

 
Q2 - How do I find a lender?

A - You can finance a home with a loan from a bank, a savings and loan, a credit union, or a private mortgage company. Shopping for a loan is like shopping for any other large purchase: you can save money if you take some time to look around for the best prices. Different lenders can offer quite different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how much home you can afford.

---

Q3 - In addition to the mortgage payment, what other costs do I need to consider?

A - You'll have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. Your real estate broker will be able to help you get information from the seller on how much utilities normally cost. In addition, you might have homeowner association or condo association dues. You'll definitely have property taxes, and you also may have city or county taxes. Taxes normally are  paid together with your mortgage payment.
 

---

Q4 - So what will my mortgage cover?

A - Most loans have 2 parts, plus 2 "extras": (a) principal: the repayment of the amount you actually borrowed; (b) interest: payment to the lender for the money you've borrowed; (c) homeowners insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and (d) property taxes: the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you'll pay far more in interest than you will in principal. Because of the way loans are structured, in the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly principal.

---

If you have a real estate question for Dottie, please send it to; Reporters@WorldPropertyChannel.com

---